"A reduction in asset buying by the Fed should only have a short term effect on the oil market," said Thina Margrethe Saltvedt, senior macro oil analyst at Nordea Markets in Oslo. "Tapering should be a positive sign…as economic growth is one of the main drivers of oil demand."
IG Markets' latest positioning data shows out of their 51 to 250 clients with open positions, 66 percent expect Brent crude prices to fall while 51 percent of their clients expect U.S. crude to rise.
From a supply standpoint, respondents are becoming more optimistic that a chronic U.S. inventory overhang - most visibly in the Midwest – will start easing as more downstream capacity is added, draining the glut and narrowing the price spread between Brent and WTI. Brent's premium to U.S. benchmark West Texas Intermediate (WTI) hit more than $19 at the end of November and currently stands at around $12.
Transcanada said earlier this month that it has begun filling its new 700,000 barrel per day Gulf Coast pipeline with oil, Reuters reported.
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The line, the southern leg of TransCanada's controversial Keystone XL project, will take crude from the Cushing, Oklahoma, storage hub to refineries on Texas's Gulf Coast.
Vandana Hari, Asia editorial director of Platts, said she expected "further narrowing of the Brent-WTI spread as TransCanada's Gulf Coast Project pipeline starts flowing crude from Cushing to Port Arthur.
SocGen's Mark Keenan said the spread should average $9 a barrel next year: "It is starting to approach levels now that are more reflective of the underlying fundamental landscape in the U.S.," he said. UBS commodity strategists believe the differential will narrow to $5-7 a barrel over the coming months.
A larger than average proportion of this week's poll respondents - one-third (9 out of 27) - are price 'neutral', reflecting expectations that the market will eventually stabilize towards the end of the trading week, even in the event of a Fed taper.
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U.S. dollar gains - if the Fed does act this week - combined with perceptions of economic strength necessary for the Fed to start removing stimulus support, may simply "cancel each other out," said Simon Grose-Hodge, head of investment advisory at LGT Bank Singapore, who has a 'neutral' short-term view on oil prices.
Bullish respondents say although improvements in U.S. economic numbers will help drive energy demand, the oil and gas supply boom in North America will continue to stifle upside price movements.
U.S. crude oil production, rejuvenated by the advent of 'fracking' shale formations, will approach historic highs by 2019, the Energy Information Administration (EIA) said on Monday, raising its forecast to levels that would have been unforeseen just a few years ago.
While crude markets are gearing up for "U.S. growth-mode pricing," said David Lennox, resources analyst at equity research firm Fat Prophets, "adequate supply will cap rallies."
— By CNBC's Sri Jegarajah. Follow him on Twitter: