Thursday's violent swings in oil prices put in a "blow off" top for West Texas Intermediate (WTI) crude, and the market is in a neutral zone with a bias to the upside, said oil analyst Mike Fitzpatrick.
CNBC
Fitzpatrick, editor of Energy Overview newsletter, expects oil to rise next week, and says the first level of resistance will be $99.59 per barrel.
"You've got all the weak longs out of the market so the positions are now in stronger hands," he said. A "blow off" top comes after a sharp spike higher gives way to an almost immediate sell off, which is usually on heavy volume.
Oil was barely changed Friday from Thursday's closing level. It finished at $97.88 per barrel, up $0.60. But the price moved above $98 after Friday's close when the U.S. said it was planning sanctions against Libya and was closing its embassy operations.
Oil soared to $103.41 early Thursday, just beneath an important technical level of $103.69 per barrel. That is the 61.8 percent retracement level between oil's all time high of $147.27 and its 2009 low of $33.20.
Oil moved lower during the day Thursday and saw a violent $2 drop at the end of the day.
"From $88 up to $103, there are longs and short positions scattered all over the place, as a remnant of what happened in the last couple of sessions," he said.
"We've got the market back in the neutral zone where you have a precarious equal librium between $95 an $100 ... They need an additional cue before we can make a trend out of this," he said.
But Fitzpatrick sees the next move as a move higher, and the technical pivot point Monday will be $97.75.
"Additionally, the market was over the 10-, 40- and 200-day moving averages and that's an automatic buy signal," he said.
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