Oil prices drop

Oil prices fell on Thursday as investors focused on the prospect of a large US rate hike that could stem inflation but at the same time hit oil demand.

Brent crude futures for September were down $1.86 cents to $97.71 a barrel at 1016 GMT after settling below $100 for a second straight session on Wednesday.

US West Texas Intermediate crude for August delivery was at $94.01 a barrel, down $2.29 cents.

Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.

"Clearly, focus is now on the demand side of the oil equation. Yesterday's weekly EIA (US Energy Information Administration) report showed sizeable builds in product inventories," Tamas Varga, analyst at PVM Oil Associates, said.

"Collateral damage of growing fears of inflation is the strong dollar, which is also bearish for oil prices. Interestingly, physical markets are still strong but the change in sentiment of financial investors is currently the dominant driving force."