Speculators Blamed For Oil Spike

[babylonsister]

Traders Blamed for Oil Spike
CFTC Will Pin '08 Price Surge on Speculators, in a Reversal From Bush Findings

By IANTHE JEANNE DUGAN and ALISTAIR MACDONALD


The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility.


The review also reflects shifting political winds. Under Chairman Gary Gensler, appointed by President Barack Obama, the CFTC is departing from the more hands-off approach it took under its previous head, a George W. Bush appointee. The agency is widely expected to adopt new rules to limit the amount of investments in commodities by big institutions betting on their direction purely for financial gain.

The agency didn't make available preliminary figures from the report and declined to discuss the previous data.

Speculators have been a lightning rod of criticism from politicians world-wide, who worry that rising oil prices could damp the recovery potential of their recession-hit economies. Many lawmakers and regulators say they want to ensure that speculators don't make it more costly for consumers to access heating oil, food and other essentials.

more...

http://online.wsj.com/article/SB124874574251485689.html

[SoCalDem]

1. Gee whiz.. whodathunkit?

Traders should not be allowed to trade in commodities unless they actually take possession of it, or can prove they have the ability to do that.

[ProdigalJunkMail]

2. i don't know about taking possession...

but they certainly need some sort of regulation...it would seem to go something like this: "Hey, I want to make a crapload of money this week...help me drive up the cost on commodity_x and I will cut you in." "Sounds good...see you on the floor!"

sP

[SoCalDem]

3. being forced to show you had the capacity to take possession

would eliminate those deals

[ProdigalJunkMail]

4. missed the capacity bit...yeah...i like that n/t