[Carlhole]

New focus on speculation

$this->bbcode_second_pass_quote('Houston Chronicle', '[')b]Report points to influence of 'dark markets' on oil price spike

WASHINGTON — Federal regulators have uncovered evidence that oil speculators operating in unregulated "dark markets" may have helped drive the price of oil to record highs this year.

The Commodity Futures Trading Commission is expected to issue a long-awaited report before Monday, perhaps today, on what role oil speculators played in the 50 percent rise in oil prices earlier this year. The report isn't expected to declare that speculators are the main cause of the price rise, a conclusion the agency rejected in an interim report in July.

One CFTC commissioner, Michael Dunn, signaled last week that the report would be inconclusive, noting, "I doubt it is possible to come up with a definitive answer one way or another at this time" about the role of speculators.

However, unregulated markets account for two-thirds of oil trading on financial markets, and they could be used to manipulate prices on regulated exchanges that account for the remaining trading.

The finding that some speculators exceeded positions allowed in regulated markets is sure to spark debate about how much the CFTC knows about the markets it regulates, whether more stringent reporting requirements are needed, and whether the government should require more disclosure from speculators and banks.

It's not entirely clear how the CFTC, which is under heavy criticism from Congress, will portray its findings about the large dark-market positions in the much-anticipated report. The agency's interim report said it thought that the soaring oil prices earlier this year were due to underlying fundamentals of supply and demand...