Bingaman pushes CFTC for full foreign oil commodity data

US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman asked the CFTC to dig deeper for more comprehensive information about oil commodity trading on foreign exchanges.

Nick Snow
Washington Editor

WASHINGTON, DC, May 28 -- US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) asked the Commodity Futures Trading Commission (CFTC) on May 27 to dig deeper for more comprehensive information about oil commodity trading on foreign exchanges.

"I recognize that tight oil market fundamentals and geopolitics are important determinants of global oil prices. However, I take seriously the testimony of oil industry analysts who have suggested that supply and demand for physical barrels of oil cannot fully explain today's prevailing oil prices," Bingaman said in a letter to CFTC Acting Chairman Walter L. Lukken.

"Moreover, the lack of comprehensive oil trade data has hampered attempts to quantify the impacts of speculative investment on the prices now imposing hardships on American consumers," the senator continued.

He said he is particularly concerned about CFTC assertions discounting the potential role of speculation in driving oil prices higher, which he said have been based "on a glaringly incomplete data set." An increasing number of US crude oil trades occur on foreign boards of trade and in over-the-counter markets for which the CFTC has limited data and oversight authority, he noted.

Swap dealer loophole
"Similarly, I am concerned that CFTC analyses classify so-called 'swap dealers,' including large investment banks, as 'commercial' market participants alongside physical hedgers such as oil companies and airlines, rather than as 'noncommercial' participants," Bingaman said. Including investment banks as commercial participants calls into questions the commission's continued assertion that noncommercial participants, or speculators, follow rather than lead oil price movements, he indicated.

"Finally, I am troubled by the fact [that] the same level of transparency requirements applicable to agricultural commodities are not currently applied to energy trading. Given that the CFTC itself has recently cited escalating diesel and related grain transportation costs as factors contributing to divergent agricultural pricing patterns, it would seem that the commission should exhaust every remedy at its disposal to shed light on current energy market dynamics," Bingaman said in his letter, which also went to commissioners Bart Chilton, Michael Dunn, and Jill E. Sommers.

The Senate committee chairman included questions about offshore oil trading reports and data, classifying swap dealers as noncommercial participants, hedging exemptions which may allow traders to exceed crude oil position limits, and whether it would be possible to implement a supplemental weekly report on energy traders' commitments with position details similar to one that already exists for 12 agricultural commodities.

Bingaman asked Lukken and the CFTC to provide responses to the questions by June 10.

Contact Nick Snow at nicks@pennwell.com.

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