Investors leery of tighter commodities oversight

By Christopher Doering - Analysis

WASHINGTON (Reuters) - Investors are bracing for tighter regulatory oversight of oil and commodities trading as politicians in the United States and Europe talk about cracking down on gyrating metal, farm and energy prices.

Soaring crude and gasoline prices in recent weeks have renewed calls for legislation aimed at preventing speculators from fueling wild moves in commodity prices.

"I think they are concerned about rising commodity prices and the speculators may push prices to record highs like what we saw in 2008," said Adrian Koh, an analyst at Phillip Futures in Singapore.

The crackdown is threatened from all fronts. The Obama administration is slated to release a financial regulation reform plan on Wednesday that would, among other things, target oversight of over-the-counter derivatives, blamed for amplifying the global financial turmoil.

During the weekend, finance ministers of the Group of Eight rich countries also advocated measures to curb volatility in commodity markets, where prices have climbed sharply this year.

"Whether you look at U.S. administration, the U.S. Congress or looking at the G8 group, we're seeing a worldwide interest in how to deal with speculation within our financial markets," said Chad Hart, an economist with the Center for Agricultural and Rural Development at Iowa State University.

But he cautioned: "One of the issues will be watching to make sure we don't tighten the reins too hard on speculation and start to kill a useful part of the market."

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