Oil prices slump as investors fear Fed rate hikes will hurt demand | Reuters

Oil prices slump as investors fear Fed rate hikes will hurt demand | Reuters

Oil prices dropped by nearly $2 a barrel on Thursday after another round of remarks from Federal Reserve Chair Jerome Powell fanned worries U.S. interest rate hikes wouldslow economic growth.

Brent crude futures settled at $110.05 a barrel, falling$1.69, or 1.5%. U.S. West Texas Intermediate (WTI) crude futures settled at $104.27 a barrel, down $1.92, or 1.8%.

Powell said the Fed's focus on curbing inflation was "unconditional" and the labor market was unsustainably strong, comments that stoked fears of more rate hikes.

Investors have been paring positions in risky assets as they assess whether inflation-fighting central banks could push the world economy into recession with higher interest rates. read more

"If the U.S., and the rest of the world goes into a recession, you can significantly impact demand," said Houston oil consultant Andrew Lipow.