LONDON: Oil futures fell on Thursday, with trader concern over the impact of a bigger-than-expected Bank of England rate hike outweighing potentially bullish U.S. oil inventory data after preliminary figures showed a fall in stocks.

Brent futures dropped by $2.22, or 2.9%, to $74.90 a barrel by 1336 GMT and U.S. West Texas Intermediate (WTI) crude futures were down $2.19, or 3%, at $70.34.

The benchmarks erased gains from the previous session, during which U.S. corn and soybean prices raced to multi-month highs, raising expectations that crop shortfalls could lower biofuels blending and increase oil demand.

On Thursday the market was cautious after Fed Chair Jerome Powell said two more interest rate hikes of 25 basis points each by the end of the year was “a pretty good guess”.

The Bank of England also raised interest rates by a bigger than expected half a percentage point to fight stubbornly high inflation. The increase was the central bank’s 13th straight hike.

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Equities, which often move in tandem with oil, were also down. Higher interest rates could slow economic growth and reduce oil demand.

Further price drivers include official U.S. oil inventory data due at 1430 GMT and Chinese factory activity data due next week.

In a preliminary indicator, industry data showed U.S. crude oil inventories fell by about 1.2 million barrels last week, defying forecasts for a build of 300,000 barrels.

Meanwhile, an executive at U.S. shale producer EOG Resources said oil prices could rise as muted increases in U.S. oil production and cuts by OPEC+ producers will limit supply in the months ahead.

“With demand seasonally rising over the coming months, we expect larger oil inventory declines to become visible and support oil prices,” said UBS strategist Giovanni Staunovo.