Delivering yet another blow to the hopes for an early recovery, the decline in crude futures extended on Friday, with the Paris-based International Energy Agency maintaining its bleak outlook for oil demand in 2009.

The New York Mercantile Exchange saw light, sweet crude for August delivery trading 79 cents or 1.3 percent lower, at $59.62 a barrel. Meanwhile, Brent crude on the ICE futures exchange traded at $60.38 a barrel, indicating a drop of 72 cents.

With the developed economies performing worse-than-anticipated, the International Energy Agency expects a 2.9 percent contraction in the 2009 oil demand. Even though the group has revised upwards its 2010 forecast, it expects a demand for 85.2 million barrels a day next year.

In its weekly report, the US Energy Department revealed a sizeable increase in gasoline inventories - saying that the total oil inventories have reached their highest level since 1990. The report, apparently a 'bearish' projection for oil markets, also hinted at a weaker-than-expected consumption.

In a commodities market report released Friday, the Deutsche Bank said: "Although crude oil inventory cover in the U. S. remains high, days of supply have been declining since May and are on a track to be back in the normal range by the start of September. The market seems to be ignoring the potential for a recovery in crude prices as inventories tighten up."