Oil climbed more than $1 this afternoon towards $95 a barrel as concerns about tight supplies in the run up to winter prevented a major sell-off.
Investors still see oil as an attractive proposition, but its march towards $100 is making them cautious about the potential for further gains.
US crude rose $1.07 to $94.56 a barrel by 3.30pm. Brent crude was up $1.16 at $90.88, off its record high of $91.71 from the previous session.
But he said concern that oil, which struck a record $96.24 yesterday, was near its peak would make investors wary.
"People may be cautious right now in going long into (oil) futures," he said. "We are in a zone of $92-$95 and there has to be a break-out either way. The question is have we topped out or are we going to cross $100."
The market is sensitive to developments in the Middle East, where Iran is under pressure from the West to halt its nuclear development programme.
The US Navy has begun a series of exercises in the Gulf involving a US aircraft carrier and two expeditionary assault ships.
The start of the exercises coincides with talks in London on Friday between the five permanent members of the UN Security Council plus Germany on whether to impose a third round of sanctions on Iran because of its refusal to halt uranium enrichment.
Oil prices have risen 40 per cent since mid-August, driven by expectations of tighter supplies this winter, a weak dollar and an inflow of money into commodities as a global credit squeeze has riled other markets.
Fears that the credit market crisis could put more pressure on the fragile US economy helped push European equities lower initially today.
But latest US employment data was reassuring.