The price of bellwether January crude oil futures on the New York Mercantile Exchange (Nymex) plunged $1.35 to settle at $11.03 in regular trading, more than erasing the gains of the previous two days.

"The market had risen all week on anticipation of the Madrid meeting and the likely bombing of Iraq. Both events occurred, but they were disappointments from the oil market's point of view," said Jim Steel, an analyst at Refco Energy Group in New York.

It became clear early on Thursday that the first wave of American and British air and missile attacks had not damaged any oil facilities and that shipments continued. The United Nations said that a ship continued to load Thursday and another was waiting after that one sails from Iraq's Gulf Port of Mina al-Bakr.

"Both the U.S. And Iraq have an interest in keeping oilsales flowing and neither wants to be accused of stopping humanitarian goods getting to the Iraqi people," said Nauman Barakat, an oil trader at Prudential Securities in New York.

"The market now feels a little bit more comfortable that there will be no disruption to Iraq exports and I think it is going to go even lower from here," said Barakat.

Indeed, oil prices were hitting the day's lows as the market closed its regular session at 3:15 P.M. EST (2015 GMT) and were heading lower again on the Nymex's after-hours Access trading system when trading was halted due to a technical glitch, shortly after the Access session opened at 4 P.M. EST (2100 GMT). The after-hours system also was suspended for a time on Wednesday, a record day of trading on Access. The access system re-opened Thursday at 6:20 P.M. EST (2320 GMT).

After the early news that Iraq's oil was still flowing, there was disappointment in the afternoon from the Madrid summit between oil ministers from Venezuela, Mexico and Saudi Arabia whenthey issued a fairly bland statement calling for compliance with existing restraint commitments from oil producers and a deal for Venezuela to extend its cuts through all of 1999.

"It really would have been better if they had not called the meeting at all," said Steel of Refco.

Rafael Quijano, managing partner at Washington D.C.-based Latin American Petroleum Services, said of Thursday's meeting: "Madrid was worse than a fiasco. All it achieved was getting Venezuela to continue its (production) cutbacks through the end of 1999, and they haven't even cut what they pledged. In fact, in November, they produced 200,000 bpd more than what they had offered (to cut)."

The three ministers had spearheaded two rounds of oil cuts earlier this year. But their efforts unravelled as some producers, including Venezuela, failed to cut as much as they promised and as worldwide demand for oil came in even lower than expected.

"This is brutal," said Nizam Sharief, with oil consultants Hornsby & Co. in Houston. "Somehowthe market thought they would come up with another cut, but the best they could do is say `stick with quotas' and that was hardly worth the trouble."