Oil settles lower ahead of potential large U.S. rate hike. Oil prices settled lower on Thursday, but pared nearly all losses after falling more than $4 earlier in the session 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 settled down 0.5% and finished a third session in a row below $100.

U.S. West Texas Intermediate crude for August delivery also settled down 0.5%.

Both contracts hit lows on Thursday which were below the Feb. 23 close, the day before Russia invaded Ukraine, with Brent reaching its lowest level since Feb. 21.

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

The Fed rate hike is expected to follow a similar move by the Bank of Canada which surprised the market on Wednesday.