Crude oil fell for a second day as a demand outlook from the International Energy Agency coupled with data from the U.S. and China reinforced concerns that the recovery is faltering. The IEA, an adviser to the Organization for Economic Cooperation and Development, raised its 2011 demand forecast by 50,000 barrels a day while noting “significant downside risks” to consumption. Oil slipped after China’s industrial output grew the least in 11 months and U.S. data showed worker productivity dropped in the second quarter. The Energy Department will release its weekly report today. “The economic signals are pretty mixed,” David Fyfe, head of the IEA’s oil industry and markets unit, said by phone from Paris. “We’ve seen weaker industrial production in the OECD, slightly weaker indications for China. We see relatively robust oil demand growth this year but we can’t rule out completely some of the concern in the market about economic growth.” Crude for September delivery fell as much as 99 cents, or 1.2 percent, to $79.26 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.46 at 12:24 p.m. London time. Brent crude for September settlement fell 73 cents, or 0.9 percent, to $78.87 a barrel on the London-based ICE Futures Europe Exchange. Global crude demand will average 87.9 million barrels a day in 2011, the IEA said in its monthly oil market report today. “In fundamental terms, the oil market is showing signs of getting a bit weaker over the next couple of years,” Simon Wardell, energy research manager at IHS Global Insight, said in a Bloomberg television interview. China Growth Slows Oil dropped 1.5 percent in New York yesterday to $80.25, the lowest settlement since July 30, as the Labor Department’s measure of employee output per hour decreased at a 0.9 percent annual rate, the first drop since the end of 2008. China’s year-on-year industrial production growth slowed to 13.4 percent in July, the fourth month of deceleration, as the government cracked down on real-estate speculation, curbed credit and closed factories to meet energy-efficiency targets. China’s daily crude processing fell 3 percent last month from a record in June as the economy cooled. Oil processing reached 35.28 million metric tons in July, or about 8.34 million barrels a day, compared with 8.64 million barrels in June, data released by China Mainland Marketing Research Co. showed today. Volumes rose 6.7 percent from a year earlier, the slowest pace since April 2009, according to the research company that compiles data for the government. U.S. Inventories U.S. crude stockpiles fell 2.2 million barrels to 352.7 million in the week ended Aug. 6, the industry-funded American Petroleum Institute said yesterday. An Energy Department report today may show inventories dropped 2 million barrels, based on the median estimate from 18 analysts surveyed by Bloomberg News. Gasoline supplies declined 1.5 million barrels to 223.5 million, the API said. The Energy Department report may show stockpiles rose 250,000 barrels, the Bloomberg News poll shows. Distillate fuel inventories, including heating oil and diesel, gained 2.3 million barrels to 165.7 million, according to the API. That’s the fifth weekly increase and the highest level since the week ended Jan. 8. The Energy Department report may show an increase of 1.75 million, according to the Bloomberg News survey.

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