The issue is with the merge-field in the style tag. It appears your code is missing opening brackets in question, but assuming the code is:
<apex:outputText value="{!foo}" style="color:{!bar}">
Then this will render on the page as, roughly,
<span style="color:{!bar}">{!foo}</span>
Now the platform will encode {!bar}, replacing "<", "&", ">", and double quotes with their HTML entity character references, and it will encode {!foo} by replacing "<", "&", and ">". However if the value of bar was expression($javascript_payload', then this will execute javascript payload in older versions of IE (or newer versions running in quirks mode). So if bar is pulled from a URL parameter, then this is a reflected XSS and if bar is pulled from the db it is a stored XSS.
Whether or not this is a false positive depends on the range of characters that can flow into the merge-field, but auto encoding is not going to protect you here.
In general avoid placing merge-fields within script and style tags as the platform does not have a CSSENCODE function as it does for JSENCODE and CSS is very difficult to sanitize (a string encoding function is not sufficient as many CSS properties do not take quoted values).
One alternative is to use CSSOM or manipulate styles with javascript based on the values of merge-fields passed to javascript within a script context.