The West Texas Intermediate for September delivery lost 3.53 U.S. dollars, or 3.5 percent, to settle at 96.35 dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery decreased 3.06 dollars, or 2.9 percent, to close at 103.86 dollars a barrel on the London ICE Futures Exchange.
The pullback came after data showed a jump in U.S. gasoline inventories, reflecting falling demand.
The U.S. Energy Information Administration reported Wednesday that the nation's total motor gasoline inventories increased by 3.5 million barrels during the week ending July 15, well above market forecasts for a rise of 400,000 barrels.
Traders also looked to a rate decision by the European Central Bank (ECB).
The ECB on Thursday raised key interest rates by 50 basis points, a bigger-than-expected move, in an attempt to cool rampant inflation.
The decision came at a time when oil participants were worried that aggressive central bank tightening would induce a recession, hurting demand for energy.
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