FXStreet reports that according to Daniel Ghali, Commodity Strategist at TD Securities, the set-up for a summer breakout is forming.

“An overly cautious policy from OPEC+ has overwhelmingly driven the breakout higher in crude oil prices, more than offsetting concerns about mobility tied to a spreading Delta variant. Monday's stalemate for August production could lead to a significant overshoot in prices during this Summer Breakout.”

“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated. This comes at a time when the cost of capital for traditional swing production has likely permanently risen, which argues for energy supply risk driving prices higher. This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being.”