Crude Oil is a naturally spawning fluid found in the over world at y=20 (as of 0.0.14). The oil can be collected and refined using a Bucket , and an Oil refinery , respectively.
Location & details
The oil spawns in small pools, of about 12 blocks or so. The oil greatly resembles water, in physics and opacity.
Refining
Once an oil source is found you need to have a Bucket . Stand within a source block of oil and hold Right mouse button, the block of oil is used almost instantly. Unfortunately the oil block isn’t destroyed, but simply lowered by about 1/3 and right clicking in the same source block will not get more oil, thus leaving some confusion of how much oil is actually there. Once the Bucket is full you can use a Refinery, the oil turns into fuel, which can then be used in the rocket.
NOTE: This is for GC 3 & GC 4 - in lower version you need an oil extractor and a Empty Liquid Canister.