Oil prices are back on the rise as global equity markets surge and geopolitical risk may be rising. Talk by President Trump of a capital gains tax cut is feeding the rally. Reports by the Iraqi military that a U.S. coalition convoy was struck by a bomb in Iraq, close to the Taji base, could add some risk aversion buying to a market that is already getting support from outside markets.

Support could also come from more whispers of another massive crude oil draw in this week's American Petroleum Institute report and Energy Information Administration (EIA) report. As my readers remember, last week we said the whispers of a big crude draw, and they came true. This week we hear of a crude draw from 4 million to as much as 10 million barrels. That is, of course, because of the impact of OPEC production cuts and falling U.S. oil production.

Still, Reuters reports that there could be a reason why U.S. inventories might not drain that quickly. They say that "Energy companies have begun taking back millions of barrels of oil from the U.S. government's emergency stockpile after renting storage in the facility to help manage a glut of crude this spring after energy demand collapsed during COVID-19 lockdowns, a Department of Energy website showed on Monday. Since August 1, the companies have taken back 2.2 million barrels of oil of the 23 million barrels they agreed to store in the Strategic Petroleum Reserve, or SPR, from April through June. The companies have until March 31, 2021, to take back the oil after renting the space for a small fee. Nine oil companies, including Exxon, Chevron, and Alon USA, rented the space from the reserve, a series of underground salt caverns on the Texas and Louisiana coasts, an Energy Department official said in April. An oil trader said that at least two companies, Exxon (XOM) and Atlantic Trading & Marketing Inc (ATMI), a U.S arm of French oil major Total S.A., had taken back the 2.2 million barrels. The taking back of the oil from the SPR might slow commercial inventory drawdowns as companies prioritize selling the barrels, market sources said. Exxon had won the lion's share of the total space while ATMI had won about 600,000 barrels of storage space, another trade source said."

The Arab News reports that "Iraq: Kuwait and Iraq separately denied an attack took place against a convoy carrying equipment for American forces. An explosion near the Jraischan border crossing between Iraq and Kuwaiti on Monday evening targeted a convoy carrying equipment for U.S. forces, and three Iraqi security forces told Reuters. It was not immediately clear if there were any U.S. troops in convoy or if anyone had been injured in the explosion, which went off just before 9 p.m. Baghdad time. The U.S. military said Tuesday it was investigating a militant claim by a newly formed Iraqi Shiite militant group of a bombing at the Iraq-Kuwait border. A little-known Iraqi Shiite militia group by the name of Ashab Al-Kahf claimed responsibility for the attack and published a video showing an explosion at a distance. It said it was able to destroy U.S. military equipment and large parts of the crossing.