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Oil prices fell for a second straight session and were headed for a weekly decline of more than 3% on Friday, as a higher-than-expected interest rate hike in Britain and warnings about looming rate rises in the U.S. ignited concerns over demand.

Brent futures slipped 51 cents, or 0.4%, to $73.76 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 42 cents, or 0.6%, at $69.09 at 0240 GMT.

"Recession fears mount again following central banks' rate hikes and a hawkish Fed," said Tina Teng, an analyst at CMC Markets, adding that a stronger dollar was also weighing on prices.

An increase in the value of the dollar, which has risen 0.3% this week, can weigh on oil demand by making the fuel more expensive for holders of other currencies.

Both crude benchmarks had dropped about $3 in the previous session after the Bank of England raised interest rates by half a percentage point, sparking fears of an economic slowdown denting fuel demand.

The market is now waiting for the release of Purchasing Managers Indexes (PMIs) from around the world on Friday for a view on manufacturing activity and demand trends.

In the U.S., crude stocks posted a surprise drawdown in the last week, helped by strong export demand and low imports, the Energy Information Administration said on Thursday. However, gasoline and distillate inventories rose. [EIA/S]

Federal Reserve Chair Jerome Powell said the central bank would move interest rates at a "careful pace" from here as policymakers edge towards ending their historic round of monetary policy tightening.

Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. Fears of hikes by major central banks have clouded the fuel demand outlook for the rest of the year.

"Energy traders are worried that the Fed and friends might cripple economic growth in the second half of the year," said Edward Moya, an analyst at OANDA.