CFTC to Investigate Oil Trading
The US Commodity and Futures Trading Commission is in charge of overseeing the markets of many different commodity futures, oil being just one of them. With the recent upswing of prices in oil, many of the bureaucrats in the country have been speculating that a large amount of the price increase might be due to illegal trading that is speculative in nature and therefore only has the intention of driving up the prices through any means necessary. If this turns out to be true, then some of the largest investors in oil might be facing potential legal action against them, something that could shake up the oil markets in a very big way.
Geoffrey Aronow was the former head of enforcement at the commission and according to him, the main point of the investigation is to attempt to determine exactly what the strategy of trading was. If there was some sort of justification behind the trading aside from idle speculation, no matter how small that justification was or how wrong it turned out to be, then chances are that no legal action will result. There needs to be very blatant market manipulation on the table in most cases for something to be done about speculative trading, especially when the people that are potentially involved have so much of their money invested.
The CFTC has been under pressure from U.S. lawmakers to crack down on speculators they blame for pushing energy prices to record levels.
U.S. crude oil hit a record high of $135.09 a barrel last week, and is up by more than 40 percent this year.
The Journal quoted CFTC enforcement chief Gregory Mocek as saying the agency has about 60 manipulation investigations open in various commodity markets.
The CFTC has expanded an investigation, disclosed previously by the newspaper, into alleged short-term manipulation of crude-oil prices via a widely used price-reporting system run by Platts, a unit of McGraw-Hill Cos .