Oil prices erased earlier gains and traded lower this morning, following an estimate by the International Energy Agency (IEA) that no supercycle for oil is around the corner amid plentiful supply and a large global spare capacity.

Just after the weekly EIA inventory report showed a crude build of 2.4 million barrels for the week to March 12, WTI Crude prices were down by 1.11 percent at $64.03 as of 10:47 a.m. EDT, while Brent Crude traded down by 1.18 percent at $67.50. Both benchmarks reversed earlier gains, which were fueled by the surprise estimate of the American Petroleum Institute (API) on Tuesday of a draw in crude oil inventories of 1 million barrels for the week ending March 12.

Oil prices turned lower after the IEA said on Wednesday in its Oil Market Report for March that it doesn’t see either a supercycle in oil or a looming supply crunch, as inventories still look ample, while OPEC+ has more than 9 million bpd of spare production capacity offline because of the cuts. “Oil’s sharp rally to near $70/bbl has spurred talk of a new super-cycle and a looming supply shortfall. Our data and analysis suggest otherwise,” the IEA said in its Oil Market Report today.

As of February, OPEC’s spare capacity – excluding Iran – stood at 7.7 million bpd, most of it in the Middle East. Non-OPEC countries taking part in the deal hold an additional 1.6 million bpd that could be brought on to the market in short order, the agency noted. The IEA also said in its annual Oil 2021 report that global oil demand would take until 2023 to return to the pre-pandemic levels of 100 million bpd, but COVID-19 would change parts of consumer behavior forever, with global gasoline demand likely past its peak already.

A rising U.S. dollar ahead of Fed’s Federal Open Market Committee this week also weighed on oil prices as a stronger dollar makes crude oil more expensive for holders of other currencies.

In addition, the suspension of AstraZeneca vaccine shots in more than a dozen European countries has raised concerns about oil demand recovery in the region as vaccination campaigns in many countries were disrupted.