Shafaq News / Oil prices fell more than $2 before paring losses on Thursday as investors focused on the prospect of a large U.S. rate hike later this month that could stem inflation but at the same time hit oil demand.

Brent crude futures for September were down $1.23 to $98.34 a barrel at 1245 GMT after losing more than $2 in the session and on track for a third finish below $100 in a row.

U.S. West Texas Intermediate crude for August delivery was at $94.89 a barrel, down $1.41, paring losses after tumbling by more than $2.

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 (U.S. Energy Information Administration) report showed sizeable builds in product inventories," Tamas Varga, analyst at PVM Oil Associates, said.

The U.S. Federal Reserve is seen ramping up its battle with 40-year high inflation with a supersized 100 basis points rate hike this month after a grim inflation report showed price pressures accelerating. The Fed policy meeting is schedule for July 26-27.

(Reuters)