Oil prices slid to a three-week low on Wednesday on expectations of falling global demand after India , the world's sixth largest oil and gas consumer, lowered its fuel subsidies.
Nymex July West Texas fell 71 cents to $123.67 a barrel while ICE July Brent lost 96 cents to $123.62 a barrel.
India hiked its petrol and diesel prices by 10 per cent on Wednesday, hot on the heels of Malaysia, which on Tuesday said it would almost double its petrol prices as part of a plan to eventually lift fuel prices to market rates.
Fuel subsidies in emerging economies have been a major factor in keeping demand for oil strong, and so maintaining its high price, but in recent weeks a string of countries have removed or reduced them as governments found their cost too painful to bear.
Gold prices fell further after taking a 1.2 per cent knock on Tuesday after comments by Federal Reserve chairman Ben Bernanke inspired a dollar rally. Mr Bernanke said he was worried about dollar weakness and inflation, which forex traders took as a cue to buy the beleaguered currency.
A rising dollar depresses gold prices because the precious metal is sold in the currency, making it seem less cheap. It is also seen as a traditional hedge against global inflation, so as those fears recede, demand for the metal dips. It was down 0.4 per cent in London to $887.40 an ounce.
In agricultural markets, corn, soyabeans and sugar all fell in line with oil, with investors also worried about US regulators' threats to increase oversight of commodities markets in light of accusations that speculators are boosting prices.
In Chicago, CBOT July soyabeans lost 2½ cents to $13.57 a bushel, while CBOT July wheat was flat at $751 a bushel.
CBOT July corn fell further, down 4 cents to $6.04 a bushel. Tyson Foods Inc, the US' second largest chicken producer, said late on Tuesday it would destroy 15,000 chickens exposed to bird flu - corn is a key feed for chicken.