On the heels of last night's big crude build, OPEC's overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp.

As Bloomberg reports, OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.

The Dec. 10 agreement between the Organization of Petroleum Exporting Countries and non-members such as Russia and Kazakhstan “will accelerate the reduction of global inventories and bring forward the re-balancing of the oil market to the second half of 2017,” OPEC said in its monthly report Wednesday.

It’s a more pessimistic outlook than that published Tuesday by the International Energy Agency, which indicated a supply deficit in the first half.

Despite a commitment from those countries to lower their output in the first half by 600,000 barrels a day, the organization slightly increased forecasts for supplies from outside OPEC in 2017. It estimates that production in Russia, which pledged half of the non-OPEC cut, and in Kazakhstan, which also agreed to cut, will remain steady for the six months covered by the deal.

And the result is further downside on oil - almost erasing the entire OPEC/NOPEC rally...

This was also not helped by some bearish notes from analysts:

SGH says Saudi Arabia “will lead efforts to put more supply in the market” if prices rise too quickly or too far above $60/bbl. Manaar Group sees Iraq cutting output less than it pledged.

SGH analysts Sassan Ghahramani and Kevin Muehring

• OPEC/non-OPEC agreement in Vienna on quotas and output cuts intends to stabilize prices, not drive them higher
• Producers plan to steer prices within a $50/bbl-$60bbl range through 1H 2017, when they expect supply and demand to rebalance

Manaar Group managing director Jaafar Altaie

• Iraq won’t cut output by 180k-220k b/d as it committed to do under Nov. 30 agreement
• Nation will probably cut only ~100k b/d, as it seeks to defend sales in Asia and avoid reducing output at fields it operates with international oil cos
• NOTE: Iraq subject to cut of 210k b/d under Nov. 30 deal, click here for story

JBC Energy

• Heating oil deliveries in France rose by almost 50% y/y in October as nuclear plant closures curbed nation’s atomic-power production by 15% y/y
• French distillate inventories in October fell by 9m bbl m/m. If confirmed, it would mean that the November middle distillate inventories in EU15 & Norway were below last year’s level for 1st time this year