Opec had a day earlier slashed output by 2.2 million barrels per day from oil markets in a bid to balance supply with rapidly crumbling demand for fuel. The 12 members of the Oragnisation of the Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel.

The cut, effective January 1, comes atop existing curbs of two million bpd agreed by Opec since September. It lowers the supply target for the 11 members bound by output limits to 24.845 million bpd – down nearly 15 per cent from September output.

Oil fell more than $3 a barrel towards $40 following the deal after weekly US data showed inventories in the world’s biggest consumer continued to swell.

Its cut, the third this year, brings a total reduction in Opec supply to 4.2 million bpd, taking nearly five per cent of world supply off the market.

A deepening recession is threatening to shrink world demand for two years running and fuel inventories are bulging. Prices already have plunged by two-thirds since the summer and analysts say the oil market is under the sway of world financial turmoil.

Opec member nations and non-Opec oil producing countries are seeing their incomes crumble as crude prices fall further from record heights reached in July.

Gold/Platinum

In the London market gold has eased slightly as the dollar recovered from lows against the euro and oil prices fell more than $1 to below $39 a barrel. Investor interest in the precious metal remains robust, however, with bullion holdings of the world’s largest exchange traded fund, the SPDR Gold Trust, rising to a record.

In the Singapore market gold slipped on December 17, after rising to a 2-month high the previous day, but global economic gloom and the Federal Reserve’s massive rate cut, which pushed the dollar lower, could still attract buying from investors.

Gold’s safe-haven appeal has been restored somewhat after it regained $800 an ounce last week, boosted by a drop in the dollar that reflected mounting economic problems, and a steady increase in demand for gold-backed exchange-traded funds.

Gold traded at $863.20 an ounce, down $3.70 from New York’s notional close on December 17, when it rallied as high as $881.20 an ounce on follow-through buying and dollar weakness after the Fed cut rates last week.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said it held 775.33 tons of gold as of December 17, up 6.12 tons from December 16.

Besides profit taking, weaker oil prices put pressure on gold on December 18, but dealers said investors were happy to buy on dips. Gold has bounced more than 20 per cent since falling to a 13-month low around $680 in October, but it was still below a lifetime high of $1,030.80 struck in March.

Gold’s recent rise sparked sales of scrap in the physical market, putting pressure on premiums in Hong Kong and Singapore.

Platinum prices are trading roughly on par with gold, a far cry from the white metal’s $1,200 price lead earlier in the year and highlighting the woes of the auto industry, a big platinum consumer.

The price of the nearby and most-active platinum futures contract for January delivery on the New York Mercantile Exchange fell $1.30 to settle at $863.90 an ounce, while the nearby December gold contract shed $7.90 to settle at $859.60 on the Comex division of Nymex.

On December 17, platinum prices settled below gold prices for the first time since the 1990s, as prices have been pummeled on weak demand from the auto industry, which accounts for more than half of platinum consumption. That day, platinum settled at $865.20 and gold at $865.20 and gold at $867.50.

The last time the nearby gold futures contract traded above the front-month platinum was January 21, 1994, when the yellow metal closed at $381.70 and platinum at $380.90.

The metals traded mostly on par with each other from October 1993 through January 1994. Gold was higher in November 1993, for some time from 1991 to early 1992 and in the mid-1980s.

The auto industry’s troubles have helped bring nearby platinum futures prices down more than 60 per cent from the $2,251.10 exchange-traded high of March. The gold record price of $1,014.60 also was set in March.

Copper

In the London market, copper prices continued to fall, dropping to their lowest levels in four years, as grim demand prospects for industrial metals, stemming from a global slowdown continued to drive bearish sentiment.

Copper for March delivery slipped 7.15 cents or 5.2 per cent, to close at $1.3015a lb in the New York Mercantile Exchange’s COMEX division. Earlier it hit a session trough at $1.2960, which marked a new low for a four month position contract dating back to October 2004 on a continuation bases.

Copper for 3 month delivery on the London metal exchange sank to $2871 a ton, its lowest since December 2004, and closed at $2895 a ton on December 17.

LME copper stocks rose more than 30,000 tons in December alone and currently stand at 324,175 tons — their highest since early 2004 as consumers and traders dumped unwanted material in warehouses. Prices of copper, used in power and construction, have fallen about 65 per cent since a record high of $8940 in July.

Demand has weakened from automobiles a major consumer of copper. As the industry copes with a weak economic climate, car production could see huge cutbacks.