Oil spikes on tightening market, OPEC snubs Trump's demand for lower prices

Oil is reporting gains on both sides of the Atlantic, courtesy of tightening market conditions and less urgency among the top producers to curb price rise.

At press time, Brent's front-month contract $79.47 per barrel, up 1.57 percent on the day. WTI oil is changing hands at $71.84 per barrel, up 1.5 percent on the day.

Prices picked up a bid after OPEC snubbed the US President Trump's demand for lower oil prices. Indeed, Saudi Oil Minister Al-Falih said that the kingdom expects to pump more oil in October and expressed readiness to increase output if demand continues to rise.

However, the Kingdom, Russia and their allies did not make any specific promises during their meeting in Algiers.

Further, oil prices are likely cheering the signs of tightening in the US market ahead of Iran sanctions. For instance, U.S. commercial crude oil inventories are at their lowest level since early 2015 and the drilling activity has subdued recently.

All-in-all, a message is being delivered to investors that major producers are unlikely to fully compensate the drop in the Iranian oil supplies.

Hence, it is hardly surprising that merchant banks like Trafigura and Mercuria are expecting Brent oil to test $100 per barrel by the next year.