Page last updated at 18:51 GMT, Tuesday, 7 July 2009 19:51 UK

US may limit energy speculation

Oil traders on the New York Mercantile Exchange
Critics say that the involvement of big banks has pushed up oil prices

A US regulator is to hold hearings to decide whether it should clamp down on speculation in the energy market.

The Commodity Futures Trading Commission (CFTC) imposes limits on trading positions in agricultural commodities but not on oil or gas.

Gary Gensler, who took over as CFTC chairman in May, wants to look into why commodities are treated differently.

The hearings are being seen as part of the Obama administration's attempts to stabilise financial markets.

They will take place in July and August.

Limit risks

If there is a restriction on speculative trading, it will probably be through a limit on the quantity of energy contracts that can be held by any institution.

At the hearings, there will also be discussions of who might be exempted from such limits.

Energy futures contracts are not just used by financial speculators.

Airlines, for example, may use them to limit their risks from rising fuel prices.

But some observers have blamed speculators for the extraordinary movements in oil prices in the past two years.

A year ago, crude oil prices peaked at $147 and then collapsed more than 70% by the end of the year.

They have doubled since the start of 2009.

While there is an argument about whether there have been fundamental factors involved, such as the varying state of the global economy, there is little question that the involvement of big financial players has exaggerated the movements.



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