More oversight for oil trading

WASHINGTON — Federal regulators said Tuesday they will place stricter limits on foreign exchanges that trade U.S. oil as concerns continue to grow about the role of speculation in rising fuel prices.

The Commodity Futures Trading Commission said it will require the London-based ICE Futures Europe exchange to adopt position limits used in the U.S. for the trading of the West Texas Intermediary crude-oil contract, which is linked to a similar contract on the New York Mercantile Exchange.

Under the new agreement, foreign officials also will share daily trading data with U.S. authorities and report violations when they are uncovered. Previously the groups shared data on a weekly basis.

Atlanta-based Intercontinental Exchange Inc., parent company of ICE Futures Europe, plans to comply with the new rules and said the CFTC action would have almost no effect on its customers or business.

Some lawmakers are increasingly blaming speculation by index funds and other large investors for artificially boosting oil and other commodity prices. Those members of Congress said the CFTC's move was long overdue.

"Why didn't we do this nine to 10 months ago when things first appeared to be moving faster than usual?" asked Sen. Ben Nelson, D-Neb., at a hearing to assess the agency's performance. "The sense of urgency on the street seems to be different from the sense of the bureaucracy. We need to match that urgency."

Meanwhile, Rep. Jim Matheson, D-Utah, introduced a bill Tuesday designed to stop market manipulation that could be contributing to the rising costs. The "Close the London Loophole Act," which already has a Senate version, would give the CFTC clear legal authority and a legal obligation to obtain trading data from foreign exchanges operating in the U.S. through direct trading terminals.

"One factor contributing to the record high price at the pump is what's going on with Wall Street energy commodity traders," Matheson said in a prepared statement. "With this bill, excessive manipulation and unscrupulous speculation can potentially be detected and halted before more economic harm is done to consumers and businesses."

Matheson sits on the House Energy and Commerce Committee, which would take up the bill before it could go to the House floor.

Matheson and Blue Dog Energy Task Force Co-chair Rep. Charlie Melancon, D-La., who co-sponsored the bill, want the CFTC to be able to detect, prevent and punish price manipulators and speculators who trade U.S. crude oil on foreign commodity exchanges.