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WASHINGTON — Federal regulators — in a highly unusual move — revealed Thursday they have been conducting a wide-reaching probe into oil trading practices for the last six months.
And in response to growing concerns about the role speculators may be playing in driving up oil prices, the Commodity Futures Trading Commission said it will require energy traders to begin providing more information so the government can better assess what effect they may be having on the markets.
"Perhaps the CFTC has gotten some religion," said Michael Masters, of Masters Capital Management LLC, who has called for tighter regulation. Although, he added, "it's just a start."
With oil futures diving more than $4 Thursday, the commission went public about its probe. It is examining the purchase, transportation, storage and trading of crude oil and futures contracts — agreements to buy or sell commodities at a later date that are central to the energy markets.
On Thursday, the commission said it would require energy traders to provide monthly reports on their index trading "to help the CFTC further identify the amount and impact of this type of trading."
House Energy and Commerce Committee Chairman John Dingell, D-Mich., said he was disappointed that the agency did not propose closing the loophole that allows some institutional investors to circumvent the speculative limits.
"The failure to corral this rampant speculation is not only ravaging consumers, but harming businesses such as airlines, trucking and auto manufacturers," Dingell said.
With oil futures diving more than $4 Thursday, the commission went public about its probe.