Smelling burning engine oil is common on the 1992-1997 Honda Prelude, and is associated with oil leaking from the valve cover. It is most common to smell the oil burning at a stop light, or just after you shut off your engine.
Engine oil leaks from the valve cover, drains down, and settles on the exhaust manifold, which burns the oil upon contact due to high exhaust gas temperatures. This creates an odor that comes through the vents, and can be smelled around the front of the vehicle.
The valve cover gasket should be replaced in a timely fashion to prevent engine misfires resulting from oil contamination of the ignition coil, which is fairly common.
Valve cover gasket replacement will correct both the leak and the smell of burned oil at the same time. If the ignition coil or spark plug wire was soaked in oil, it will need to be cleaned or replaced to stop or prevent misfires.
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