Oil prices slumped on the possibility of a recession in the United States, the world's top oil user, countered worries over a supply shortage on Thursday.

Brent crude slipped 0.63% to $86.78 per barrel while US WTI dropped 0.55% to $82.20.

On Wednesday, Brent and WTI both increased by 2% to their highest levels in more than a month as expectations that Fed will cease rising interest rates were stoked by declining U.S. inflation.

The stress in the banking sector, according to the minutes of the Fed's most recent policy meeting, could push the country into a recession and reduce demand for oil.

In a monthly report published on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) highlighted threats to the decline in oil consumption throughout the summer. Nonetheless, OPEC did not revise its projection for the rise in oil demand worldwide in 2023.

Markets on Wednesday dismissed a slight increase in U.S. crude oil inventories, attributing it in part to the release of oil from the country's emergency reserve and reduced exports at the beginning of the month.