Are oil producing countries manipulating U.S. oil futures prices?

In a little noted or reported letter requesting information about commodities speculators, Congress has asked the Commodities Futures Trade Commission for information about how other countries are speculating in U.S. oil, grain and other commodities futures markets. The letter is here.

The question is, are net oil exporters like Venezuela, Nigeria, Iran, Mexico and Saudi Arabia inflating oil prices by buying futures contracts on the New York Mercantile Exchange?

Are the Sovereign Wealth funds, as they are known, trading heavily enough to inflate prices. If they are inflating prices, by how much? Sovereign Wealth funds invest money held by their countries’ governments.

While Saudi Arabia and other OPEC countries are making nice noises about the need to take speculators out of the oil markets, they may at the same time be lining their pockets with inflated oil revenues caused by their own speculative activities.

John D. Dingell (D-MI), chairman of the House Committee on Energy and Commerce, and Bart Stupak (D-MI), chairman of the Subcommittee on Oversight and Investigation, asked the CFTC to:

Please provide a list of Sovereign Wealth Funds that have commodity investments including:
a. An estimate of the open intererst in futures and options held by Sovereign Wealth Funds.
b. How many Sovereign Wealth Funds from countries that are net exporters of oil are taking positions in oil or other energy futures?
c. In the event that CFTC does not have sufficient information to assess the size and extent of these investments, please issue a Special Call for information to obtain a list of the Sovereign Wealth Funds, identify their aggregate positions in commodities, and make this aggregated information public.

Congress asked for a report by June 20, but the CFTC told a Congressional hearing Monday that the agency would have the information by Sept. 15.

Read the whole letter. It’s a very interesting discussion of speculation in the futures markets.

 

Commenting is not available in this channel entry.

<< Back to main