The oil rice is under further pressure today, following on from last week’s steep decline as the market remains uncertain how effective Opec’s and Non Opec countries such as Russia extended production cuts will be in boosting the price.

There have been problems right from the start with two countries that were expected to join production cuts being exempt and are expected to keep supplying a sizable amount of oil to the market for the foreseeable future,

“Libya and Nigeria remain exempt, rising production in these two countries will further complicate the Opec effort. Nigeria is targeting production to touch 2 million barrels per day this year and Libya could increase output by another 0.2 million barrels per day in the coming months. This would roughly translate to an increase of about 0.5 million barrels per day from these two alone” Noted Harshal Barot is a Commodities Analyst at Motilal Oswal Commodities Brokers

According to Mr Barot, the production cuts ,which have been extended until next year may put a floor under current prices, but will do little to push them higher as more and more US oil hits the market with no signs of slowing down,

We believe that rising US output will continue to cap prices this year but the Opec deal, for now, has ensured that WTI prices probably won't fall below $45-47. This means that oil prices will broadly continue to swing between $45-55 for most part of 2017. Mt Barot added.