WASHINGTON (Reuters) - The head of the Senate Energy Committee, on Friday, turned up the heat on the country’s futures regulator by asking the agency to explain what was behind the recent movement in oil prices.
Democrat Jeff Bingaman was the latest lawmaker to question oil price volatility.
Efforts to understand price moves in the oil market and whether speculators are to blame for the swings have gained momentum, as oil prices hover near $100 a barrel and U.S. consumers pay nearly $4 a gallon for gasoline.
President Barack Obama has blamed speculators for driving gasoline prices higher, saying there was enough oil in world markets to meet demand. The administration created a working group of federal agencies to probe potential fraud in the energy markets. Several lawmakers have pushed the CFTC to act.
In a letter to the chairman of the Commodity Futures Trading Commission, Democrat Jeff Bingaman asked the agency to explain if major market players, such as banks, have an incentive to increase existing volatility in the oil markets. He also asked whether increased margin calls have affected price formation across the commodities arena.
Bingaman said, indications are that there is, “plenty of oil available to meet current world oil demand,” despite lost oil output from Libya.
“Meanwhile, oil price volatility has increased rather than decreased, as the situation in Libya has become clearer, and the imminent threat to world oil demand has abated,” Bingaman said in the letter to the CFTC’s Gary Gensler.
He asked the CFTC to respond by July 1.
U.S. lawmakers have turned up the heat on the CFTC to curb oil speculation by imposing position limits on the number of contracts big market players can hold in oil and other commodities.
Senator Carl Levin, who heads a panel on investigations, has said he plans to investigate speculation in oil markets.
Reporting by Christopher Doering; Editing by Carole Vaporean