GenerationType.AUTO vs GenerationType.IDENTITY in hibernate

How could it "work properly" (you don't define basic info like what you mean by that) with Oracle ? I don't see the relevance of AUTO to your question - that simply lets an implementation choose what it wants to use.

"IDENTITY" (as per JPA javadocs and spec - what you should be referring to) means autoincrement. There is no such concept in Oracle, yet there is in MySQL, SQLServer and a few others. I would expect any decent JPA implementation to flag an error when even trying such a thing.

Oracle would allow "SEQUENCE", or "TABLE" strategies to be used however

Quoting Java Persistence/Identity and Sequencing:

Identity sequencing uses special IDENTITY columns in the database to allow the database to automatically assign an id to the object when its row is inserted. Identity columns are supported in many databases, such as MySQL, DB2, SQL Server, Sybase and Postgres. Oracle does not support IDENTITY columns but they can be simulated through using sequence objects and triggers.

so I prefer to use SEQUENCE instead

Sequence objects use special database objects to generate ids. Sequence objects are only supported in some databases, such as Oracle, DB2, and Postgres. Usually, a SEQUENCE object has a name, an INCREMENT, and other database object settings. Each time the .NEXTVAL is selected the sequence is incremented by the INCREMENT.

Example :

@Entity
public class Employee {
    @Id
    @GeneratedValue(strategy=GenerationType.SEQUENCE, generator="EMP_SEQ")
    @SequenceGenerator(name="EMP_SEQ", sequenceName="EMP_SEQ", allocationSize=100)
    private long id;
    ...
}