Oil prices are on a strong uptrend, with the basis light sweet crude November futures contract on the New York Mercantile Exchange trading at $90.02 a barrel on October 17, breaking the $90.00 level for the first time. Now it seems that the $100.00 a barrel oil prices suggested by Goldman Sachs earlier in the year may not be that far off.

 Analysts believe oil is getting some help from traders buying energy futures as a hedge against the declining U.S. dollar, as well as tensions in northern Iraq. On the other end, oil may see some selling pressure after a report by the U.S. Energy Department pointing to higher oil and gasoline supplies.

 As I have said in countless commentaries, the high oil prices are a real concern because of the negative impact on transportation companies, where oil is a major part of expenses. For the economy, the high oil prices translate into higher corporate costs and could impact earnings. For the consumer, high oil prices translate into high gasoline prices. People will tend to drive less and make fewer trips to the malls, which, in turn, impacts retail sales and the economy.

 The near-term technical picture for the October oil is bullish at this time with strong Relative Strength, but the buying has also created an extremely overbought condition on the chart, an indication of potential near-term selling pressure. The October oil is trading above its 20-day and 50-day moving averages of $82.79 and $77.75, respectively, as well as the 200-day moving average at $70.09. The upside target is a pivot point at $90.09 and the 14-day 80% RSI at $92.07.

 In the upcoming sessions, watch to see if the break at $90.00 will hold and drive oil prices higher. My feeling is that the overbought condition could drive some profit taking in the near term to the high $80.00 range. Fundamentals will continue to drive trading.