March 5 (Bloomberg) -- Crude oil fell for a second day in New York on speculation global economic growth will slow, curbing fuel demand.

Stocks in Europe and Asia dropped after a global slump wiped out $1.8 trillion in world market value last week. The selling began in China, the world's second-biggest oil consumer. Crude oil sank close to $10 a barrel in December 1998, when falling demand in Asia left a glut of oil on the market.

``The sell-off in crude is being tied to the stock market, which makes sense if you look at the stock market as a gauge of the broader economy,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``Slower economic growth, especially in Asia, is very worrisome for the crude oil market.''

Crude oil for April delivery fell $1.57, or 2.6 percent, to close at $60.07 a barrel on the New York Mercantile Exchange. Futures touched $62.49 a barrel on March 1, the highest since Dec. 26. Prices are down 5.7 percent from a year ago.

Service industries in the U.S. expanded at the slowest pace in almost four years last month, a report today showed. The Institute for Supply Management's index of non-manufacturing businesses including banking, construction and retailing fell to 54.3 in February from 59 in January, the Tempe, Arizona-based group said. Readings above 50 point to growth in services.

Royal Bank of Scotland Group Plc's index of European services fell to 57.5 last month from 57.9 in January. Growth in U.K. service industries slowed in February, with an index based on a survey of 700 companies falling to 57.4 from 59.2, another industry report showed today.

Weaker Growth

``I think the market is being hit today because we had weaker service growth in the U.K., the euro zone and the U.S.,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte, North Carolina. ``Also, U.S. crude-oil inventories are expected to post an increase in this week's DOE report.''

U.S. crude-oil stockpiles probably climbed 2.03 million barrels from 329 million barrels the prior week, according to the median of forecasts by 12 analysts surveyed by Bloomberg News before an Energy Department report on March 7.

Warmer weather is forecast to move into most of the U.S. by this weekend, cutting heating-fuel consumption. Temperatures in almost all of the lower 48 states will be above normal from March 10 to March 14, according to the National Weather Service.

``While it looks to be very cold the next couple of days, things will moderate by the end of the week,'' said Kyle Cooper, director of research at IAF Advisors in Houston. ``We are looking for very mild temperatures in most of the country during the next few weeks.''

Iran's Nuclear Program

International Atomic Energy Agency Director-General Mohamed ElBaradei said negotiations with Iran are the only option for finding a ``comprehensive and durable'' solution to the dispute over the Iranian nuclear program. The U.S. accuses Iran of building a nuclear-weapons program, while Iran says its nuclear activities are legal and meant to generate electricity.

The UN Security Council's five permanent members -- the U.S., China, Russia, the U.K. and France -- plus Germany made progress toward an agreement on an incremental toughening of sanctions on Iran, the British and Russian ambassadors to the UN said March 2. The IAEA is the United Nations' nuclear agency.

Crude oil futures in New York jumped to a record of $78.40 a barrel on July 14 partly because of violence in the Middle East and concern that Iran's defiance of United Nations nuclear inspectors might disrupt the nation's exports. Iran is the fourth biggest oil producer.

OPEC Oil

The Organization of Petroleum Exporting Countries will probably keep production quotas unchanged when ministers meet March 15, after announcing cuts of 1.7 million barrels a day since October, Algerian Oil Minister Chakib Khelil said March 3. OPEC members are responsible for about 40 percent of global oil production.

OPEC members cut output 0.3 percent to an average 29.89 million barrels a day in February, according to a Bloomberg News survey of oil companies, producers and analysts. Totals for January and February include an estimate for Angola, which became OPEC's 12th member on Jan. 1.

Brent crude oil for April settlement declined $1.54, or 2.5 percent, to close at $60.54 a barrel on the London-based ICE Futures exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: March 5, 2007 15:25 EST