Have Oil Prices Topped Out?

Commodity traders are warily keeping their respective eyes on the Federal Reserve Bank, which is expected to announce another round of stimulus for the floundering U.S. economy. In the interim, profit takers took advantage of the recent rally in crude oil prices and sold off their holdings, bringing the price of crude futures lower for the first time in several days. The slide was also helped along by China’s weaker than expected economic data.

Analysts from Societe Generale said in a recent client note that they see oil prices near the top of their trading range, and believe that with the geopolitical risks from the Middle East traders can expect to see a drop in crude oil prices through the end of the year. West Texas Intermediate, which is traded on the New York Mercantile, is likely to drop to about $93.90 per barrel within the next few months and to $92.30 a barrel in 2013.

Nymex-traded crude oil is currently trading at $96.66 a barrel, after falling about $0.30 and one commodity analyst in Tokyo doesn’t see prices moving too much ahead of the Fed. On OpenBook sentiment among the oil traders is primarily bullish with 73% of traders opening long positions against 27% going short.

Quite a few traders are also putting in orders to buy positions including OpenBook trader azrv13 from France who earlier put in two orders to buy oil at $94.85 and $96.46. OpenBook trader vitvereg from Hungary wrote recently on the Oil discussion wall that he suggests traders wait for the correction to finish and go long at $94.30; the trader has no open oil positions but closed a long recently with a 75% gain.

There are a lot of price-moving factors at play right now, including the Fed decision, the Middle East turmoil, OPEC, China and the prospect of rising demand as the winter months begin in the U.S. and Europe; do you agree with analysts that oil prices are headed lower?