LONDON (AFP) - Oil prices tumbled under 59 dollars on Friday on renewed demand concerns, as the IEA said signs of a strong rally in global economic growth and oil demand were fading. The International Energy Agency however added in its latest monthly report that there could be a dramatic turnaround for demand next year. New Yorks main contract, light sweet crude for delivery in August dropped 1.25 dollars to 59.16 dollars a barrel, after earlier touching 58.72 a low point which was last seen on May 18. In late afternoon London trade, Brent North Sea crude for August delivery fell 1.30 cents to 59.80 dollars per barrel, having already hit 59.53 which was last reached on May 26. Crude oil is heading for its biggest weekly decline since January, as the US dollar gained against the euro, reducing the appeal of commodities as a hedge against inflation, said David Evans, market analyst at Oil has fallen about 10 percent this week amid concerns a prolonged global recession may sap energy demand. Despite the weeks fall, crude prices are up more than 60 percent since the start of the year, fuelled partly by a weak dollar and overly upbeat hopes of a recovery in the global economy, analysts said. The demand-supply situation doesnt justify that sort of a rapid rise over such a short period of time, Gavin Wendt, an analyst for Fat Prophets research consultancy, said on Friday. In the last two months many economists had announced that the global recession was bottoming out and were forecasting a strong recovery in the second half of this year, the International Energy Agency commented on Friday. But over the past two weeks the mood has suddenly changed, as many leading economic and energy indicators continue to show very weak readings, suggesting that the 'green shoots have been largely driven by a rebuild of inventories rather than by strong end-user demand, the IEA said. We thus remain sceptical regarding the much-trumpeted, strong second half 2009 (oil) demand rebound, even if China exceeds expectations, it added. Oil prices had eked out small gains on Thursday after falling below 60 dollars for the first time since late May as the market pondered sluggish energy demand in major economies. In its weekly oil inventories report Wednesday, the Department of Energy reported a sharp spike in gasoline and other oil product inventories in the week ending July 3. Although crude oil inventories plunged a sharper-than-expected 2.9 million barrels, the decline was driven by a surge in refinery use. By contrast, US oil product stockpiles have ballooned in recent weeks because of weak demand amid a severe recession that began in December 2007. US oil demand over the past four weeks was down 5.9 percent from the same period in 2008. Group of Eight (G8) leaders agreed Wednesday that 70-80 dollars was a fair price to pay for a barrel of oil, a spokeswoman for Russian President Dmitry Medvedev told reporters. The G8 leaders ... agreed that this price is fair, the spokeswoman Natalya Timakova said.