UPDATE 8-Oil prices slump as investors fear Fed rate hikes will hurt demand

Reuters

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 (Updates with settlement prices, comments)
    By Laila Kearney
    NEW YORK, June 23 (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 would slow economic growth.
    Brent crude  LCOc1  futures settled at $110.05 a barrel,
falling $1.69, or 1.5%. U.S. West Texas Intermediate (WTI) crude
 CLc1  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.  urn:newsml:reuters.com:*:nW1N2WO01A
    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.
 urn:newsml:reuters.com:*:nW1N2X9040
    "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.  
    Also, high gasoline prices could be starting to slow demand,
said Robert Yawger, director of energy futures at Mizuho in New
York.
    "That's definitely worked its way into the conversation,"
said Yawger, adding he thought gasoline still had room to rise.
U.S. retail prices are currently averaging $4.94 a gallon, down
about 10 cents from the peak, according to AAA.
    Major U.S. oil refiners and Energy Secretary Jennifer
Granholm emerged from an emergency meeting over the issue with
no concrete solutions to lower prices, according to a source
familiar with the discussions, but the two sides agreed to work
together.  urn:newsml:reuters.com:*:nL1N2YA15P
    The most recent estimates by the American Petroleum
Institute, according to market sources, showed U.S. crude and
gasoline inventories rising last week, which also weighed on
prices, Yawger said.
    Official weekly estimates for U.S. oil inventories were
scheduled to be released on Thursday but technical problems will
delay those figures until next week, the U.S. Energy Information
Administration said, without giving a specific timeline.
 urn:newsml:reuters.com:*:nL1N2Y92WP 
    OPEC and allied producing countries including Russia will
likely stick to a plan for accelerated output increases in
August in hopes of easing crude prices and inflation as U.S.
President Joe Biden plans to visit Saudi Arabia, sources said. 
    The group known as OPEC+ agreed at its last meeting on June
2 to boost output by 648,000 barrels a day in July, or 7% of
global demand, and by the same amount in August, up from the
initial plan to add 432,000 bpd a month over three months until
September.  urn:newsml:reuters.com:*:nL1N2YA24M

 (Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi
in Tokyo and Muyu Xu in Singapore; Editing by David Goodman,
Barbara Lewis and David Gregorio)
 ((Laila.kearney@thomsonreuters.com; (917) 809-0054;))

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