Lawmakers to discuss FTC's role as Washington keeps probing oil-price jump By Laura Mandaro, MarketWatch http://tinyurl.com/5gz9wk Last update: 2:11 p.m. EDT May 30, 2008
SAN FRANCISCO (MarketWatch) -- Legendary hedge fund manager George Soros and a top executive at the Chicago Mercantile Exchange are slated to testify next week on manipulation in the energy markets, a Senate panel said Friday, as Washington widens its probe of what's driving record-high oil prices. Tuesday's hearing, held by the Senate Committee on Commerce, Science and Transportation, will try to determine what factors the Federal Trade Commission should consider when it makes rules on preventing manipulation in the wholesale oil and petroleum distillates markets. It's the latest public forum focused on whether drivers besides supply and demand are responsible for a spike in oil, grains and other commodities prices. The main regulator for the U.S. futures industry on Thursday announced a series of changes designed to make it easier to determine what types of investors -- notably financial firms making bets on prices or commercial traders looking to hedge their output and use -- are making big moves in energy markets. The announcement by the Commodities Futures Trading Commission follows previous testimony by the regulator's officials that jumps in oil and agricultural commodities have little correlation with increased investments by index traders, or investors who allocate a portion of their portfolios to investments that track popular commodities index. See related story. But large users of commodities, as well as some investors, have maintained that speculators are a key reason behind the commodities run-up. They have faulted rules regulating what the CFTC considers a financial speculator, as well as the regulator's data collection. Prior to Thursday's announcement, oil futures trading on the IntercontinentalExchange Inc.'s (ICE intercontinentalexchange inc com
Financials Sponsored by: NMX) New York Mercantile Exchange. The CFTC said it had reached a deal with the U.K. Financial Services Authority and ICE Futures Europe to get data on daily large trader positions in the U.K. West Texas Intermediate oil contract. Plus, the CFTC will require energy traders to provide monthly reports on index trading and review the current classification of index traders and swaps dealers. Soros, who made a fortune betting against the British pound in 1992, has recently weighed in on the role financial traders are playing in the commodities markets. In an interview published by Britain's Daily Telegraph on Monday, Soros said speculation has been affecting the price of oil, which he believes is looking increasingly like a bubble. Terrence Duffy, executive chairman of the Chicago Mercantile Exchange Group (CME CME
Sponsored by: CME) , a representative of the Petroleum Marketers Association of America and a senior official at the Federal Energy Regulatory Commission are also scheduled to testify.
Crude oil futures on Friday recently traded up 70 cents at $127.33 a barrel. Oil futures have more than doubled in the past year. See Futures Movers. End of Story
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