Oil prices followed the stock market lower, with the Dow Jones Industrial Average off over 100 points in afternoon trading.
Average nationwide retail gasoline prices continued their monthlong slide as well, hitting a new low for the year on Friday.
Benchmark crude for March delivery fell $1.15 to settle at $74.13 a barrel on the New York Mercantile Exchange.
China ordered banks Friday to increase reserves for a second time in a month as leaders worried that a stimulus-driven torrent of lending is fueling a dangerous bubble in stock and real estate prices. They also are concerned that the flood of money surging through the economy is adding to inflation.
Investors are counting on developing countries such as China and India to push demand
- and prices - for oil higher, especially given the weak levels of consumption in the U.S., Europe and Japan.
If China, expected to be the main driver for increasing oil consumption, slows its economy, that could further depress global demand and help keep oil and gasoline prices down.
"This is significant when it comes to commodity prices and future demand," said Phil Flynn of PFGBest.
Supplies of all petroleum products continue to be abundant even with the colder-than-normal temperatures across much of the country.
Data released Friday by the Energy Information Administration showed that U.S. inventories of crude and gasoline rose last week and supplies of distillate fuel used for heating oil and diesel fuel dropped less than expected.
Peter Beutel of Cameron Hanover said in his report Friday that inventories of distillates used for heating oil and diesel fuel were at their highest levels at the end of January since 1983.
