U.S. Asks the U.K. to Set Limits on Oil Speculation
June 13, 2008; Page C7
WASHINGTON — The U.S. energy-futures watchdog is requesting that its United Kingdom peer set limits on speculative trading of front-month West Texas crude contracts on ICE Futures Europe, a unit of the Intercontinental Exchange, two people close to the matter said Thursday.
The Commodity Futures Trading Commission has been under increasing pressure by Congress to rein in speculation in the markets, which many believe has contributed to record-high oil and gasoline prices.
Many analysts and energy economists — including U.S Treasury Secretary Henry Paulson — continue to argue that a tight market, fears of geopolitical events that could disrupt supplies and a weak dollar are the primary factors.
The CFTC two weeks ago agreed with the U.K.’s Financial Services Authority that the U.S. agency would be notified when speculation levels similar to those set by the New York Mercantile Exchange were reached on ICE Europe.
While Nymex operates as a U.S.-regulated market, ICE Europe operates as a foreign exchange with trading terminals in the U.S. and is exempt from U.S. rules on reporting and speculation limits.
One person close to the matter was unsure if an actual agreement on setting levels had been set. Another said that even if the FSA and ICE Europe had agreed to the setting of limits on the front-month contracts, the FSA still isn’t sure who is doing the trading.
Write to Ian Talley at [email protected]
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