By Nesa Subrahmaniyan and Nicholas Larkin Oct. 10 (Bloomberg) -- Oil dropped below $80 a barrel in New York and copper headed for its worst week in more than 20 years on concern the deepening financial crisis will push the global economy into a recession, cutting demand for raw materials. Oil in New York headed for its biggest weekly decline since 2004 as plunging share prices in Asia and Europe left the MSCI World equity index headed for its worst week since 1970. ``The prospect of a deep global recession and the negative demand implications for oil are causing the downward trend in prices to continue,'' said Christopher Bellew, a senior broker at Bache Commodities Ltd. in London. Crude oil for November delivery fell as much as $7.02, or 8.1 percent, to $79.57 a barrel on the New York Mercantile Exchange. The contract traded at $80.33 at 9:11 a.m. in New York. Crude futures are down more than 15 percent this week, and have dropped 45 percent from a record $147.27 a barrel on July 11. ``Oil markets are again under pressure this morning due to the collapse in overnight global equity'' markets, said Robert Laughlin, senior broker at MF Global Ltd. in London. ``We have panic and fear from financial sectors dominating proceedings. I fear oil prices will not recover until the financial sector sell- off has been exhausted.'' Copper, Zinc Copper for delivery in three months fell as much as $515, or 9.7 percent, to $4,800 a metric ton, the biggest one-day decline since October 2004. The contract traded down 7.8 percent at $4,900 a ton as of 1:22 p.m. on the London Metal Exchange. The metal is headed for its biggest weekly plunge in more than two decades. Nickel, zinc and aluminum also fell. Gold fell for the first day this week in London trading, reversing an advance that pushed it to a 10-week high. Gold for immediate delivery slid $9.60, or 1.1 percent, to $903.65 an ounce as of 1:39 p.m. local time. The metal rose earlier to $931.95, its highest since July 29. The MSCI World fell for a seventh day, losing 3.9 percent, and Japan's Nikkei 225 Stock Average slumped 11 percent, the second biggest drop on record. Europe's Dow Jones Stoxx 600 declined 7.6 percent. More than $4 trillion has been erased from global equities this week even as central banks across the world were forced to cut interest rates on concern banks will run out of money. The International Energy Agency, an adviser to 28 nations, cut its forecast for global oil demand next year by 0.5 percent as the worst financial crisis since the 1930s threatens a global recession. IEA Cuts The IEA lowered its 2009 projection by 440,000 barrels a day to 87.2 million barrels a day, the Paris-based agency said today in its monthly report, citing a weaker economic outlook from the International Monetary Fund. Non-OPEC supply growth this year has been ``largely wiped out'' after hurricanes in the Gulf of Mexico and pipeline disruptions in Azerbaijan. U.S. fuel demand averaged about 18.7 million barrels a day during the past four weeks, the lowest since June 1999, according to an Energy Department report on Oct. 8. The figure is down 8.6 percent from the year-earlier period. The U.S., which consumes 24 percent of the world's oil, is now in a recession, according to a Bloomberg News survey of economists. The economy probably shrank at a 0.2 percent annual pace in the third quarter and 0.8 percent in the last three months of 2008, according to the median estimate of 52 economists surveyed Oct. 3 to Oct. 8. The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world's oil, signaled yesterday it may cut output at an emergency meeting on Nov. 18. OPEC Production OPEC is ``very likely'' to cut oil production at the meeting in Vienna because prices have fallen ``dramatically,'' the group's president, Chakib Khelil, said yesterday. The group had been scheduled to meet next on Dec. 17 in Oran, Algeria. ``OPEC can't fix the problem in the financial markets,'' said Toby Hassall, a research analyst with Commodity Warrants Australia in Sydney. ``They would be very cautious in making any huge cuts in output as they wouldn't want to slow down an already slowing world economy by cutting and push prices up.'' OPEC resolved at its most recent meeting in Vienna last month to stick more closely to official quotas, implying a cut of about 500,000 barrels a day. Brent crude oil for November settlement declined as much as $5.37, or 6.5 percent, to $77.29 a barrel on London's ICE Futures Europe exchange, and traded at $78.86 at 1:15 p.m. local time. Prices have fallen 13 percent this week. To contact the reporters on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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