Oil prices tumbled about 3% today as investors worried that rate hikes by the Federal Reserve could push the US economy into recession, dampening demand for fuel.

Brent crude futures were down $2.95, or 2.6%, to $111.70 a barrel by 1643 GMT. It hit a session low of $107.03 a barrel, lowest since May 19.

US West Texas Intermediate fell $3.15, or 2.9%, to $106.37 a barrel.

The session low was $101.53 a barrel, lowest since May 11.

Investors assessed on Wednesday how interest rate hikes designed to cool soaring inflation might stall an economic recovery.

Oil prices pared losses, however, during the session after Fed Chair Jerome Powell pledged an "overarching focus" on bringing down inflation and reiterated that ongoing increases in the central bank's policy rate would be appropriate, with the pace depending on the economic outlook.

"Powell seemed to change the mood of the market by seeming confident about the U.S. economy," said Phil Flynn, analyst at Price Futures.

"His words have soothed the market and put a bottom on prices for the short-term."

Meanwhile, US President Joe Biden is expected to ask Congress to consider a three-month suspension of the 18.4 cents per gallon federal tax on gasoline and call on states to suspend their fuel taxes, a senior administration official said.

While lower pump prices could actually boost demand for fuel and support crude prices, PVM analyst Stephen Brennock

Politicians of both major parties have expressed resistance to suspending the federal gasoline tax, which Biden was expected to announce today.

The White House asked the chief executives of seven oil companies to a meeting this week to discuss ways to increase production capacity and reduce gasoline prices of around $5 a gallon as they make record profits.

Chevron CEO Michael Wirth said criticising the oil industry was not the way to bring down fuel prices and the government should change its approach.

Biden replied he was unaware oil executives could "get their feelings hurt that easily."

Global supply is still expected to lag demand growth, as flagged this week by trading giant Vitol and Exxon Mobil Corp.

The $2.4 trillion set to be invested in energy this year includes record spending on renewables but falls short of plugging a supply gap and tackling climate change, the International Energy Agency said.

US oil refining capacity fell in 2021 for the second year in a row, government data showed.