Oil prices headed south Wednesday on reports of continued buildup of U.S. crude inventories impacting further on global oversupply.
Brent crude for December delivery had fallen 14 cents to $48.57 a barrel while U.S. crude for December delivery dropped 27 cents at $46.02 a barrel. The November contract, which expired on Tuesday, finished down 34 cents at $45.55 per barrel. A slightly weaker dollar provided some support but not enough to make a significant difference in the price.
Analysts say that the biggest challenge at the (OPEC) meeting will be getting Saudi Arabia on board…..
Special OPEC Meeting
A special meeting of OPEC members plus eight additional countries--Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman, and Russia—is scheduled for Wednesday, October 21st, in Vienna but analysts are not expecting to hear any good news. Some are saying, however, that the meeting offers a sign that major oil producers are willing to collectively discuss the plunge in oil prices and even a minimal consensus on production reduction could at least discourage market participants from betting on further falling prices. Analysts say that the biggest challenge at the meeting will be getting Saudi Arabia on board, but they do see some semblance of the country’s hard line stance weakening somewhat.
At the same time, industry experts believe that ex-Soviet oil producers, including Russia and Azerbaijan, are unlikely to bow to pressure to reduce output in an effort to lift prices leaving little chance of a deal.
Major oil producers continue to urge OPEC to cut production but OPEC leaders have refused to lower the production ceiling, leaving producers struggling under some of the lowest prices in years. Industry experts say they do not expect to see much recovery in 2016 if current production levels continue.
At the same time, oil nations are feeling the strain of OPEC’s continuing price war. An interesting news piece that appeared in a major newspaper recently highlighted how OPEC’s battle for market share of the Asia-Pacific region (which accounts for over a third of global demand) is pitting one cartel member against another. Kuwait is undercutting its crude vis-à-vis Saudi Arabia while Iraq and Qatar are using similar tactics. Qatar’s oil prices are selling at its biggest discount in twenty-seven months.
At the OPEC meeting, Venezuelan President Nicolás Maduro will introduce a proposal to coordinate energy policy over the next decade with the aim of balancing supply and demand. Maduro will propose progressive production cuts to control prices with a “first floor” of $70 a barrel and later a target of $100 a barrel. Venezuela is a founding member of the OPEC and is the world’s fifth largest oil exporting country.
U.S. Over Production
Meanwhile, the American Petroleum Institute released data that showed U.S. commercial crude stocks were up by a larger-than-expected 7.1 million barrels to 473 million barrels in the week to Oct. 16. Analysts had expected a 3.9 million barrels increase. 
At the same time, the U.S. Energy Information Administration is scheduled to release an official inventory report later on Wednesday which is expected to show a buildup in crude stocks for a fourth straight week as a result of low refinery utilization caused by continuing refinery maintenance.
Asian oil production is also adding to the continued global surplus with China's crude imports continuing to grow over the next five years at an average annual rate of 3.2 percent according to a BMI research report.