Traders expect government data to show a build in U.S. crude supplies Oil futures accelerated their decline Thursday, weighed down by expectations of a build in crude supplies and gloomy economic data from China and the United States. Crude oil for March delivery dropped $1.70, or 3.8%, to $41.88 a barrel in electronic trading on Globex. "On the demand side, the markets received more evidence of the extent of the global economic weakness," said Nimit Khamar, an analyst at Sucden Financial Research, in a note. China's economy grew at its slowest pace in seven years in the fourth quarter, as slumping exports put the brakes on the world's fastest-growing major economy. Read more about China's economy. Gross domestic product in China expanded 6.8% in the October-to-December period compared to a year ago, easing from a 9% expansion in the preceding three-month period, according to data released by the National Bureau of Statistics Thursday. The result was in line with a median estimate for a 6.9% expansion of 13 economists polled by Dow Jones Newswires. For the full calendar year, China's GDP expanded 9%, cooling from a 13% expansion in 2007. Elsewhere in Asia, Japanese exports fell by a larger-than-expected 35% in December, the biggest fall on record, stoking more concerns about the global economy. Read more. In the United States, data showed that first-time applications for state unemployment benefits rose 62,000 to a seasonally adjusted 589,000 in the week ending Jan. 17. Separately, housing starts fell more than 15% in December to a seasonally adjusted annual rate of 550,000, the lowest on record. The sharp deterioration in the world economy has led to a steep decline in energy demand and resulted in the recent sharp slide in oil prices, which have tumbled 52% over the last 12 months. On Wednesday, oil futures rallied more than 6%, buoyed by gains in U.S. equities, signs that the OPEC oil cartel is cutting output, as well as optimism about President Barack Obama's economic stimulus package. "Short term, we suspect that energy markets will continue to shadow U.S. equities over the next few days, as the state of the U.S. banking system will be front and center in terms of market attention, and undoubtedly exert a major influence on commodities," said Edward Meir, an analyst at MF Global. Also, OPEC's implementation of its announced supply cuts is supporting oil prices, he said. The Organization of Petroleum Exporting Countries pledged in December to reduce daily output by 4.2 million barrels from September levels. "Having said that, rallies towards the $50 mark will remain vulnerable and should be sold into, as we would not give OPEC too much credit here," Meir said. Supply data ahead The Energy Information Administration will report its latest data at 11 a.m. Eastern time on Thursday, a day late because of Martin Luther King Jr. Day on Monday and the presidential inauguration on Tuesday. Analysts expect a buildup of 1.9 million barrels in U.S. commercial crude inventories for the week ended Jan. 16, according to a Platts survey. They also anticipate a week-to-week increase of 1.9 million barrels for gasoline stocks as well as a decline of 2.25 million barrels for distillates, the survey showed. The analysts project a drop in the refinery utilization rate of 1.4 percentage points, to 83.8%. Traders will be watching closely inventory levels at Cushing, Okla. -- the delivery point for Nymex oil futures. Inventories at Cushing jumped to 33 million barrels in the week ended Jan. 9, the highest level on record. Platts estimates that maximum storage capacity at Cushing is about 42.4 million barrels, but only 80% of that is considered operable. Also on Globex, March reformulated gasoline fell 4 cents to $1.16 a gallon, and March heating oil dropped 3 cents to $1.35 a gallon. March natural gas futures fell 22 cents, or 5%, to $4.56 per million British thermal units. The Energy Information Administration will report on gas supplies in storage at 10:30 a.m. Friday, a day later than usual. Analysts at IHS Global Insight are projecting a storage withdrawal of 149 billion cubic feet for the week ended Jan. 16. `

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