Oil futures fell sharply Friday, pressured by rising inventories and worries about the severity of the global economic downturn. Crude for March delivery dropped $1.87, or 4.3%, to $41.78 a barrel in electronic trading on Globex. Earlier, the contract hit an intraday low of $41.40 a barrel. Prices "tracked equity markets lower amid the deteriorating economic outlook and fears of further demand destruction," said analysts at Sucden Financial Research. On Wall Street, U.S. stocks fell sharply, as corporate earnings and yearly outlooks weighed heavily on investor sentiment. In Europe, Britain's economy contracted at its fastest quarterly pace in nearly 29 years during the final three months of 2008, according to government data. This marked a result even worse than most economists' pessimistic expectations, as gross domestic product shrank by 1.5%. Read more. 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 51% over the last 12 months. On Thursday, oil futures ended slightly higher, reversing sharp declines after U.S. stocks pared losses on optimism that the Obama administration will take measures to boost the economy and the markets. "Given that any 'banking plan' is several weeks off at best, we would not be surprised to see the sellers return in the interim," said Edward Meir, an analyst at MF Global. He noted "no apparent follow-through" on the heels of Thursday's reversal. Earlier on Thursday, oil fell sharply following a very bearish update on U.S. petroleum stockpiles. The Energy Information Administration (EIA) reported that U.S. crude supplies rose by 6.1 million barrels to stand at 332.7 million barrels during the week ended Jan. 16. The build was much higher than the 1.9 million barrels analysts had expected. Inventory levels at Cushing, Okla. -- the delivery point for oil futures used on the New York Mercantile Exchange -- rose 200,000 barrels to reach a record 33.2 million barrels, the government's data showed. Also on Globex, March reformulated gasoline fell 2 cents to $1.10 a gallon and March heating oil dropped 2 cents to $1.32 a gallon. Natural-gas supplies fell by 176 billion cubic feet to stand at 2,560 billion cubic feet for the week ended Jan. 16, the EIA reported Friday. Analysts at IHS Global Insight had expected a storage withdrawal of 149 billion cubic feet. After the data, February natural gas futures fell 13 cents, or 3%, at $4.56 per million British thermal units. Elsewhere on the commodity markets, gold futures rallied to a three-week high Friday, as falling equities and worries about the global economy prompted investors to seek a safe haven.

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