Oil prices continued to tumble yesterday in the wake of OPEC's inability to curb oil production, raising the prospect that inflation will be lower next year than this year.

In commodity trading in New York, the price of a key grade of U.S. oil, West Texas intermediate, dropped to $16.85 for a 42-gallon barrel, with delivery next month. Prices for this crude oil have declined almost $1.50 in two days and are well below the $22-a-barrel level hit briefly earlier this year.

Each $1 decline in the price of a barrel of crude oil reduces refiners' costs by about 2 1/2 cents a gallon for petroleum products such as gasoline and home heating oil. With the United States consuming almost 6 billion barrels of oil products a year, each $1 drop in the price means the same amount of oil will cost about $6 billion less.

Officially, the new production and price agreement OPEC concluded Monday sets an $18-a-barrel price, but industry analysts said that without significant production cuts by OPEC members there is no way to hold prices at that level. A $17-a-barrel price for West Texas Intermediate crude on the New York Mercantile Exchange is equivalent to about $15.50 for the key grade of OPEC oil, Saudi Arabian light crude.

John Lichtblau of the Petroleum Industry Research Foundation, an industry-sponsored group, said, "It looks like they {the OPEC members} have established a quota that is much too high for the first quarter {and} they are sticking with the $18 price. This volume at $18 is contradictory."

Just how far oil prices may fall, and therefore how much of a restraining influence they will have on inflation in the United States, is uncertain. Lichtblau and other analysts said that if the price for Saudi light crude began to fall very sharply, as it did in 1986 when it went below $10 for a time, OPEC members might be willing to set aside their political differences and reach a new agreement to limit production and prop up prices.

At $17 a barrel, oil is already about $3 a barrel less than some forecasters expected it to be during 1988. If the lower prices stick, that difference should produce a one-time downward movement of about 0.4 percentage points in the general level of U.S. prices.

If prices continue to fall, the impact on the consumer price index next year will be still larger. A decline in West Texas Intermediate crude to $15 a barrel -- or $13.50 for Saudi light -- could knock a total of about 0.6 or 0.7 percentage points off next year's CPI increase.

Most forecasters had been predicting an acceleration of inflation in 1988 above the 4.3 percent to 4.5 percent level expected for this year. Wage gains were expected to be larger next year than they have been for several years, and the falling dollar was expected to make imported goods more costly. Meanwhile, a Social Security tax increase Jan. 1, and a possible increase in the federal minimum wage, were also expected to add to labor costs and inflation.

However, since the October stock market plunge, many forecasters, including those in the Reagan administration, have lowered their expectations about both real economic growth and inflation for 1988.

If the economic growth slows substantially in the first half of next year, as many now predict, and oil prices stay down, inflation in 1988 could well turn out to be lower than it has been this year.

Such a development would reduce the possibility that the Federal Reserve might have to raise interest rates to head off unacceptable inflationary pressures or to support the dollar.

Even if growth does not slow very much, the break in oil prices will still help hold down inflation and contribute to somewhat lower interest rates.

In the 12 months ended in October, the consumer price index rose 4.5 percent. The energy portion of the CPI went up 8.1 percent, largely because oil prices rebounded from their lows of 1986.

Gasoline prices increased about 20 percent over the period, and heating oil was up 16.6 percent. On the other hand, natural gas prices fell 4.3 percent and electricity prices rose only 0.6 percent. The natural gas price drop was due in part to the sharp decline in oil prices last year when a significant number of industrial users of gas switched to cheaper residual fuel oil. Cheaper oil also was a factor in electricity pricing.

In every year from 1982 through 1986, the energy component of the CPI rose less rapidly than the nonenergy portion of the index.

The impact of this slower rise in energy prices was to reduce the overall rate of inflation by amounts ranging from 0.2 percentage points in 1985 to a whopping 2.7 percentage points in 1986. In the 12 months through October, higher energy prices have added 0.3 percentage points to the CPI increase.