How are fossil fuels are formed underground?

Like their name implies, fossil fuels are derived from organic material that was once part of a living thing. As organisms die and are buried in sediments, they are exposed to increasing pressures and temperatures that chemically alter them from animal remains into natural gas and oil deposits (and coal seams, as well).

Without being buried, without changing pressures and changing temperatures, fossil fuels would not form. Hence, they are found in rock because animals die and become buried in sediment, which then becomes rock.