Oil prices extend drop as recession fears cloud global demand outlook

(Reuters) - Oil prices slipped in early Asian trade on Thursday, after hitting a nearly three-month low during the previous session, as fears of a potential global recession spurred concerns about oil demand.

Brent crude futures fell 71 cents to $99.98 a barrel by 0013 GMT. WTI crude futures fell 62 cents to $97.91 a barrel.

The declines follow a dramatic fall on Tuesday. WTI slid 8% while Brent tumbled 9% - a $10.73 drop that was the third biggest for the contract since it started trading in 1988.

"Oil is getting decimated with little new information about production or consumption," said Stephen Innes, managing partner of SPI Asset Management.

"Still, with commodity traders turning very risk-averse due to growing demand and still hawkish (U.S.) Fed policy concerns, the recessionary headline risk is like an anvil around the market's neck."

Investors awaited U.S. government data due on Thursday that will shed light on the state of domestic oil and fuel inventories.

Industry data on Wednesday showed that U.S. crude inventories rose by about 3.8 million barrels last week, according to market sources. Gasoline inventories fell by 1.8 million barrels, while distillate stocks fell by about 635,000 barrels. [API/S] [EIA/S]

(Reporting by Stephanie Kelly; Editing by Kenneth Maxwell)

By Stephanie Kelly