Oil Prices Hit 5-Year Lows on Futures Market in N.Y.

Prices of crude oil and refined petroleum products tumbled to five-year lows Wednesday on the New York Mercantile Exchange. It was the first trading session since the Organization of Petroleum Exporting Countries ended its divisive year-end meeting last week in Geneva.

“Most people in the oil industry are quite disappointed in the lack of progress by OPEC in stabilizing the market,” said Edward Dellamonte, an oil analyst at the New York investment firm of Prudential-Bache Securities Inc.

West Texas Intermediate crude oil, the major U.S. grade of oil, slid as low as $25.86 a barrel in contracts for February delivery before recovering slightly to close at $25.92 at the Mercantile Exchange. That was still down 49 cents from Friday, the last session before the New Year’s break, and was the lowest level for crude oil since late 1979, said Mary Ann Matlock, a spokeswoman for the exchange.

In other contracts for February delivery, heating oil fell 2.18 cents to close at 71.14 cents a gallon, regular gasoline dropped 1.53 cents to 64.38 cents a gallon, and regular unleaded gasoline fell 1.9 cents to 66.20 cents a gallon--all the lowest levels since mid-1979.

“The market doesn’t believe that what OPEC did in Geneva will have any effect, and I agree with the market,” said William Randol, an oil industry analyst at the New York securities firm First Boston Corp.

OPEC oil ministers attempted in last week’s sessions to restore the cartel’s credibility in world oil markets and to adjust its often-ignored pricing system.

The meeting ended Saturday with two OPEC members, Nigeria and Algeria, refusing to go along with their 11 colleagues and heightened doubts about OPEC’s ability to re-exert control over oil prices.

OPEC’s attempts to revive sagging markets by cutting back on production have been hindered by cheating within its own ranks on the cartel’s price and production quotas.

OPEC ministers agreed last week to hire outside auditors to keep track of member output and prices. But the meeting adjourned without completing details of the plan and without deciding what, if any, penalties would be imposed on countries that cheated.

Immediately after the session, Algeria announced it would not completely comply with the policing program.

The cartel also agreed to keep its $29-a-barrel price for Arabian Light, OPEC’s reference grade of oil. But it said it would raise heavier grades by 50 cents a barrel, increase medium grades by 25 cents and lower extra light oils 25 cents.

Both Algeria and Nigeria refused to go along with the agreement.