Oil heads for weekly drop
Bank of England hikes rates to 5 in surprise move
U.S. crude inventories post unexpected decline

LONDON, June 23 Reuters Oil dropped for a second day on Friday and was heading for a weekly decline, as a UK interest rate hike added to concern over economic growth that outweighed lower U.S. crude stocks and other signs of tighter supplies.

Both crude benchmarks had dropped about 3 on Thursday after the Bank of England raised interest rates by a biggerthanexpected half a percentage point. Central banks in Norway and Switzerland also hiked rates.

Brent crude slipped 1.21, or 1.6, to 72.93 a barrel at 0810 GMT, while U.S. West Texas Intermediate WTI crude was down 1.31, or 1.9, at 68.20.

After yesterday39;s central banks39; action, anxiety has palpably grown, said Tamas Varga of oil broker PVM.

Due to strengthening economic headwinds caused by recession fears, only conspicuous stock depletion will herald a protracted change in the currently ominous outlook.

Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and cloud the oil demand outlook for the rest of the year.

The prospect of more U.S. interest rate hikes added to those headwinds. U.S. Federal Reserve Chair Jerome Powell said this week two more rate hikes of 25 basis points each by the end of the year was a pretty good guess.

An increase in the dollar, drawing support from hawkish comments from global central banks, also…