Federal regulators are six months into a wide-ranging investigation of US oil markets, with a focus on possible price manipulation.
The Commodity Futures Trading Commission said on Thursday it started the probe in December and took the unusual step of publicizing it “because of today’s unprecedented market conditions.”
Crude prices have risen more than 42 percent since early December, even after a decline of more than US$4 to US$126.62 a barrel on the New York Mercantile Exchange on Thursday. Gasoline prices are nearing a national average of US$4 a gallon (US$1.05 per liter), up from about US$3.20 a year ago.
The commission said it was investigating potential abuses in the way crude oil was purchased, shipped, stored and traded nationwide, but did not reveal details.
The agency also announced a handful of other initiatives designed to increase transparency of US and international energy futures markets.
For example, the commission said it would immediately require monthly reports from institutional investors who manage funds designed to mimic the price of crude oil and other energy futures. The goal, it said, is to identify the amount of such index trading and to “ensure that this type of trading activity is not adversely impacting the price discovery process.”
The agency said it had reached an agreement with its British counterpart and InterContinental Exchange Inc’s Futures Europe to expand surveillance of energy futures contracts with US delivery points, including the benchmark West Texas Intermediate crude, which trades on the Nymex.
“The implementation of today’s measures will improve oversight of the energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud,” the commission said in a statement.
Analysts said the commision’s action would likely have a limited impact on oil prices, which have risen on a combination of factors, including growing demand in China and other developed nations, the falling value of the dollar, geopolitical tensions and low interest rates, which have fueled a futures buying binge by institutional investors seeking to ride oil’s upward momentum.
It is the last factor, exacerbated by theUS Federal Reserve’s efforts to prop up the ailing housing market, that is playing the biggest role in the recent runup, said Howard Simons, a strategist at Bianco Research in Chicago.
“Eliminate that excess money and the problem [of soaring prices] disappears,” he said.
Still, the commission’s action “will have a chilling effect” on speculative investors’ enthusiasm for energy futures, Simons said. “What they’re saying ... is, ‘You either stop this or we’re going to stop it for you.’”
At least one energy analyst sees trouble on the horizon for pension funds and other non-traditional investors looking to commodities indexes as just another type of security they need to have in their portfolios. If a major price drop occurs, this relatively new breed of investors will want out of energy futures at the same time and it will be “like entering a revolving door at the wrong time in the wrong direction,” Cameron Hanover Inc president Peter Beutel said.
BUILDUP: US General Dan Caine said Chinese military maneuvers are not routine exercises, but instead are ‘rehearsals for a forced unification’ with Taiwan China poses an increasingly aggressive threat to the US and deterring Beijing is the Pentagon’s top regional priority amid its rapid military buildup and invasion drills near Taiwan, US Secretary of Defense Pete Hegseth said on Tuesday. “Our pacing threat is communist China,” Hegseth told the US House of Representatives Appropriations Subcommittee on Defense during an oversight hearing with US General Dan Caine, chairman of the Joint Chiefs of Staff. “Beijing is preparing for war in the Indo-Pacific as part of its broader strategy to dominate that region and then the world,” Hegseth said, adding that if it succeeds, it could derail
CHIP WAR: The new restrictions are expected to cut off China’s access to Taiwan’s technologies, materials and equipment essential to building AI semiconductors Taiwan has blacklisted Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (SMIC, 中芯), dealing another major blow to the two companies spearheading China’s efforts to develop cutting-edge artificial intelligence (AI) chip technologies. The Ministry of Economic Affairs’ International Trade Administration has included Huawei, SMIC and several of their subsidiaries in an update of its so-called strategic high-tech commodities entity list, the latest version on its Web site showed on Saturday. It did not publicly announce the change. Other entities on the list include organizations such as the Taliban and al-Qaeda, as well as companies in China, Iran and elsewhere. Local companies need
CRITICISM: It is generally accepted that the Straits Forum is a CCP ‘united front’ platform, and anyone attending should maintain Taiwan’s dignity, the council said The Mainland Affairs Council (MAC) yesterday said it deeply regrets that former president Ma Ying-jeou (馬英九) echoed the Chinese Communist Party’s (CCP) “one China” principle and “united front” tactics by telling the Straits Forum that Taiwanese yearn for both sides of the Taiwan Strait to move toward “peace” and “integration.” The 17th annual Straits Forum yesterday opened in Xiamen, China, and while the Chinese Nationalist Party’s (KMT) local government heads were absent for the first time in 17 years, Ma attended the forum as “former KMT chairperson” and met with Chinese People’s Political Consultative Conference Chairman Wang Huning (王滬寧). Wang
CROSS-STRAIT: The MAC said it barred the Chinese officials from attending an event, because they failed to provide guarantees that Taiwan would be treated with respect The Mainland Affairs Council (MAC) on Friday night defended its decision to bar Chinese officials and tourism representatives from attending a tourism event in Taipei next month, citing the unsafe conditions for Taiwanese in China. The Taipei International Summer Travel Expo, organized by the Taiwan Tourism Exchange Association, is to run from July 18 to 21. China’s Taiwan Affairs Office spokeswoman Zhu Fenglian (朱鳳蓮) on Friday said that representatives from China’s travel industry were excluded from the expo. The Democratic Progressive Party government is obstructing cross-strait tourism exchange in a vain attempt to ignore the mainstream support for peaceful development
RSS