Agency investigates oil inventory for futures manipulation

By Charlie Morasch, Land Line staff writer | 9/8/2008

The Commodity Futures Trading Commission is reportedly investigating whether some oil companies are falsely reporting inventory levels in order to drive prices higher.

The Wall Street Journal reported last week that the commission is taking testimony on periods when big moves have happened on the oil futures market, including July 2007.

Oil futures have come under increasing scrutiny in recent months as Congressional leaders have questioned manipulation of commodities through foreign market rules that aren’t always as stringent as American laws.

In addition, futures traders rarely purchase the actual commodity and need a minimum of cash.

Known as the “Enron Loophole,” Congress allowed U.S. futures commodities to be traded in foreign markets. Some experts believe that allowing trading in markets that offer less transparency than U.S. markets may open up commodities trading to manipulation and higher prices at the pump.

The U.S. Energy Information Administration told Reuters it was unaware of any investigation by federal market regulators, but will check on any suspicious data.

“If something looks anomalous in our weekly or monthly data, we’ll flag it and we’ll follow up and verify it is correct,” said EIA spokesman Jonathan Cogan. “We have to reconcile all the numbers from the supply side and the demand side. All the components need to add up.”

– By Charlie Morasch, staff writer

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