Oil prices fell sharply Wednesday as traders feared global economies would sink into recession, cutting energy demand worldwide. 

The benchmark oil contract recently traded lower by $3.71 to $74.92 a barrel.  Oil now trades at 48% off its record price of $147.27 per barrel. 

Market participants say a number of non-technical factors led to today's decline. A key factor, analysts say, is the deluge of negative economic data traders were hit with.  

"There is a lot of negative news flow out there," said National City Private Client Group Energy Analyst Jim Halloran.

"Nobody wants to touch [oil] on the upside because of the bearish sentiment." 

Broad selloffs in the equity markets as we experienced today "tend to foster negative oil prices and vice-versa," he added. 

The Organization of Petroleum Exporting Countries, supplier of 40% of the world's oil, corroborated traders' concerns by slashing its demand expectations for 2009.  

"Dramatically worsening conditions in financial markets indicate strong fallout on the real economy is now inevitable," the cartel said today in its monthly oil market report.

"Ongoing financial market turmoil is expected to continue to impact oil demand well into the coming year."

Another factor that could be depressing oil prices is liquidations by major players in the oil trading market.  Companies have been forced to sell energy holdings in a bid to raise capital or pay-off margin calls, according to Halloran. 

Analysts have mixed views about where oil is going from here.  Goldman Sachs (GS) recently said oil could reach as low as $50 in the near-term – other analysts aren’t convinced.

“Energy has been dragged considerably lower in the overall market selloff, though I don't believe it's completely warranted,” Neal Ryan manager of Ryan Oil & Gas Partners said in an email.

“There has been no major fundamental shift in the supply [and] demand picture, though demand is decreasing, but global demand can only fall so far.”

Meanwhile, the average price drivers paid at the pump for regular gas continued sliding to $3.13 per gallon Wednesday, according to the AAA's Daily Fuel Gauge Report.  Gas prices are far off the July 17 high of $4.11 per gallon, but are still elevated compared to historical norms. 

Other energy futures followed crude oil’s selloff.  Heating oil traded lower by about six cents to $2.20, and natural gas slipped 13-cents to $6.60.  

Gold, often seen as a safe store of value during turbulent times, traded higher by $1.40 to $840.