Crude oil prices are being supported artificially by stimulus but they will eventually see a downturn, analysts said early last week.

The analysts offered their market outlook for the remainder of 2010 at the ninth annual Dow Jones Indexes Mid-Year Commodity Outlook seminar in Chicago held on July 21.

“Oil has been a pawn in the economic recovery story and is being artificially supported by historic economic stimulus and economic puffery,” said Phil Flynn, senior energy and general market analyst, PFG Best Research. “Because of that, oil prices are in a range that will eventually see a down-turn, most likely breaking into the $40 range.”

He added, “Gasoline is back to $1.80 per gallon and Heating Oil is at $1.84 per gallon.”

On other commodity markets, the analysts said grains prices have held steady for now, and prices could stay range-bound for the long term.

“Grains and oilseed prices have been testing the low end of their projected ranges but have held steady for now,” said Jack Scoville, vice president with Price Futures Group.

The analysts expect institutional investors to continue putting their money into commodity assets. Jon Fraade, managing director, UBS Securities LLC, cited a recent FT/Towers Watson survey that showed about 2 percent of pension assets are allocated to commodities, and expects the commodity allocation to surge going forward.

The Dow Jones-UBS Commodity Index is down 9.66 percent so far this year. In terms of sectors, the Dow Jones-UBS Precious Metals Sub-index has the strongest year-to-date gain, up 12.80 percent.