July 10, 2008 / 4:35 PM / 11 years ago

CFTC says no evidence of oil manipulation, hoarding

WASHINGTON (Reuters) - The head of the Commodity Futures Trading Commission told Congress on Thursday there is no evidence that market traders are working together to push up crude oil prices or that oil supplies are being hoarded.

“We have no evidence that people are hoarding oil,” CFTC Chairman Walter Lukken told a House Appropriations subcommittee.

He also said the CFTC doesn’t “see systemically in the current market” that traders are “working together” to drive up prices.

Separately, he said the CFTC and other members of an interagency task force plan to give Congress an interim report “in the coming weeks” on the role speculators have played in the crude oil market.

The other agencies in the task force include the Treasury Department, the Securities and Exchange Commission, the New York Federal Reserve and the Energy Information Administration.

Many U.S. lawmakers blame investments by hedge funds, pension funds and other speculators for causing higher prices for crude oil, corn and a variety of commodities.

“We haven’t evidence that speculators are broadly driving these prices,” Lukken said.

Democratic Rep. Rosa DeLauro, who chairs the House subcommittee, accused the CFTC of not doing enough to rein in excessive speculation and protect consumers from soaring fuel prices.

“Speculative bubbles emerge, regulators do nothing in the name of letting markets do their magic, the bubble bursts, and consumers and taxpayers pay the bill,” DeLauro said. “We go from one financial crisis to another, but do not ever seem to learn the lessons.”

She said price controls are not the answer.

“But when one sees prices weaving down the road as erratically as they have been, it may make sense give the market a sobriety test,” she added. “The amplitude of these swings does not appear to make sense.”

Lukken said high crude prices are due to flat oil production around the world that is unable to keep up with growing global oil demand.

“We’re consuming more than we’re producing,” Lukken said.

He said the CFTC was on track to provide Congress by September 15 the agency’s final report on the impact of commodity index funds on energy futures prices.

Lukken said speculators are needed to provide liquidity to futures markets, making it easier for hedging companies like airlines to offset the risk of high fuel prices.

He warned that speculators may go to overseas markets if U.S. regulations became to burdensome.

Reporting by Tom Doggett; Editing by Christian Wiessner

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