"This is a validation of the strength of the U.S. economy," said Barry Hyman, stock strategist at EKN Financial Services.

The Dow added 56.99 points yesterday as oil prices plunged nearly 4% - the biggest decline in more than a year to a seven-month low of $58.68 a barrel. The sharp drop had Wall Street bullish on consumer confidence and less concerned about a big economic slowdown.

Earlier in the day, the Dow had rallied as much as 89 points to an intraday high of 11,758.95, overtaking its previous trading high of 11,750.28 - also reached on Jan. 14, 2000.

"Today was all about oil and the money flow out of energy stocks into technology and financial stocks," Hyman said.

The Dow wasn't the only index rocking yesterday. The broader S&P 500 rose 2.79 to 1,334.11, and the Nasdaq climbed 6.05 to 2,243.65.

Wal-Mart, which has said in recent months its shoppers are pulling back in the face of high gas prices, led yesterday's Dow rally - adding $1.02 to close at $49.46.

Boeing also took flight, adding $1.81 to $81.78. Home Depot rose 49 cents to $36.83.

But energy stocks went cold, with ExxonMobil standing out as the biggest Dow decliner. It fell $1.59, or 2.4%, to $65.41.

Yesterday's record showing for the Dow caps three years of steady gains for the market. The index has surged 10% since July as oil prices dropped and the Fed ended a string of 17 straight interest rate hikes.

Mindful of stock declines earlier this year that followed the Dow's approach to record territory, some Wall Street experts warned that the market could head down after this recent run.

"The market is already up substantially," said Al Goldman, market strategist for A.G. Edwards. "This is not the time to pull the cork out of the champagne bottles. We've already used up a lot of energy and money to get here."

The countries, which already produce less than their Opec targets, plan to lower output by a combined 170 000 barrels per day (bpd), starting from last Sunday. Other members of the oil producers' cartel have not announced cuts.

"There are massive amounts of supply in the short term," said Tovin Honeysett, a BNP Paribas broker. "The comments from Venezuela and Nigeria are more verbal than anything else; they're already producing at the level they've talked themselves down to."

London Brent crude for November delivery fell $1.94 to $58.51 a barrel yesterday. US light crude fell $2.03 to $59.

"The fall can be attributed to the huge inventories, particularly that of heating oil," said V Raghuraman, a senior energy adviser at the Confederation of Indian Industry. "Prices should continue to head southwards."

US inventories of distillate fuel, which include heating oil and diesel, probably increased by 1.5 million barrels last week, from an inventory of 151.3 million the week before, according to the median forecast of eight analysts in a Bloomberg survey. Petrol stockpiles probably climbed 1.5 million barrels from 213.9 million the week before. Crude oil supplies probably fell 1.1 million barrels. The US energy department will release its inventory today.

Opec decided last month to maintain its collective production quota at 28 million bpd. Ministers said they would watch the market closely for significant declines in the price of oil.

Iain Armstrong, an analyst with Brewin Dolphin Holdings, said Nigeria and Venezuela were "small players" without a sufficient share of Opec production to swing prices. Venezuela produced 2.5 million bpd in August, less than its quota of 3.2 million, according to Bloomberg estimates. Nigeria produced 2.2 million bpd, less than its target of 2.3 million.

Saudi oil minister Ali al-Naimi said on September 19, when US crude was around $62, that the price was reasonable. After oil hit a peak of $78.40 in mid-July, the kingdom had consistently said oil was too expensive.

Iran said on Sunday that it would back any Opec action to lift prices back to acceptable levels.

Venezuela's President Hugo Chavez said on Friday that an "appropriate" price for oil was between $50 and $60. That was the same day Caracas agreed to cut production by 50 000 bpd.

Nigeria pledged on Thursday to cut supplies by 5 percent, or about 120 000 bpd. Asked whether Opec would cut production in December, cartel president and Nigerian oil minister Edmund Daukoru said last week: "Something needs to be done to steady the price."

Algerian energy and mines minister Chakib Khelil said yesterday that prices would recover next year.

The only Opec member not subject to output restrictions, Iraq, has also expressed concern over the drop in prices.

The increase was led by the auto industry, which announced nearly 34,000 cuts. That was dominated by suppliers who are starting to feel the effects of the production cutbacks at Ford, General Motors and DaimlerChrysler.

There were also sizable increases in the telecommunications and housing industries.

So far this year employers have announced more than 639,000 job cuts, a drop of 18 percent from a year ago.

"Look, you can't come on this boat because we don't have enough safety equipment for all of you," said the man from Adelaide. Mr Mitvol drew himself to his full height and stabbed an angry finger at Mr D'Ardenne's chest. "This is the Russian Federation," he boomed. "You haven't bought it yet. I am the deputy head of a government agency and I decide what happens here. This vessel leaves now. And if there isn't enough space, then get off."

In a roadshow at times reminiscent of high farce, Mr Mitvol last week led a posse of journalists, ecologists and one confused-looking South Korean diplomat on a breakneck tour of alleged environmental violations committed by Shell and its Japanese partners in Sakhalin Energy.

Prizefighter

No effort was spared to expose the rot. The group, including the Guardian, was flown from Moscow 6,000 miles east to Sakhalin island in a chartered Ilyushin jet with leopard-print seats.

"You must see with your own eyes how Shell is destroying our nature," said Mr Mitvol, a former associate of the oligarch Boris Berezovsky who has emerged as the Kremlin's prizefighter in an increasingly nasty scrap with foreign oil and gas companies. He has claimed the cost of correcting the alleged mistakes on Sakhalin could be as high as $50bn, and promised a criminal case for every illegally destroyed tree.

Last week, the ministry of natural resources revoked a 2003 environmental permit for the Sakhalin-2 project, which is still under construction. The move, yet to be fully approved by other state bodies, could freeze the development, adding billions to its cost. A month-long environmental investigation is under way to determine how Shell can make amends for alleged damage.

Shell denies mismanagement and western governments have protested, with diplomats saying privately that it seems a ploy to persuade Shell to hand Russia's state gas monopoly, Gazprom, a generous slice of the project in an uneven asset swap.

Other foreign energy companies have also been accused of ignoring rules to protect nature, raising suspicions that the Kremlin had decided that environmental permits are a new mechanism for putting pressure on uncooperative foreign partners.

Russian officials are furious that companies such as Shell have refused to renegotiate production-sharing agreements struck in the early 1990s when the country was poor and obliged to accept unfavourable terms. Under the Sakhalin-2 agreement Shell can recover all project costs - an estimated $20bn - before it begins to share profits with the Russian government.

Moscow's sudden eagerness to protect the environment has brought it some unlikely bedfellows: the ecologists who usually criticise the Kremlin. "We are prepared to be prostitutes with anyone if the end result is protection of the environment," said Igor Chestin, head of the World Wildlife Fund's Russia branch, who joined the trip and acknowledged the removal of Sakhalin Energy's permit "was probably linked to Gazprom".

One theory is that Gazprom wants to get its hands on shares in regasification plants owned by Shell in the United States - where liquefied natural gas is heated to turn it back into gas form.

Environmentalists say Sakhalin-2 construction work has disrupted the only known feeding ground of the western grey whale, damaged mature forests and caused the death of wildlife. The first stop on Mr Mitvol's trip was Aniva Bay on the southern tip of the island after the incident with Mr D'Ardenne was resolved by a phone call from the Sakhalin Energy chief executive, Ian Craig.

Landslide

Divers on the boat claimed Shell had illegally dumped a million cubic metres of waste in the bay as it deepened one section to provide access for tankers to service the LNG plant being built on shore. "All kinds of sea creatures have been totally destroyed," said Dmitry Lisitsyn from Sakhalin Environment Watch.

Next stop was 35 miles from the island's capital, Yuzhno-Sakhalinsk, where the path of Shell's pipeline from its platforms further north gouged a huge swath through a forested hillside. Ivan Blokov, Greenpeace campaign director for Russia, said the pipeline corridor was four times wider than agreed and landslides had blocked a stream for spawning fish - something repeated at approximately 100 other waterways along the route. "This is a catastrophe."

As he spoke, Joshua Ogunyannwo from Nigeria, the construction engineer for Sakhalin Energy's onshore pipelines, was ambushed by Mr Mitvol. Surrounded by excited ecologists and officials, Mr Ogunyannwo admitted there was "a little problem with a mudslide" on this section, but claimed it was "work in progress" and not typical of the rest of the route.

Sakhalin Energy officials had earlier dismissed Mr Mitvol's trip as a "pleasure tour" and said they were continuing work as usual, having received no notification to halt their activities.

Mr Mitvol was unrepentant. "After what I have seen here, I am going to do everything in my power to stop this project and force Shell to put right its mistakes," he said.