Topic: Anti-speculation push may topple oil prices
A debate is emerging over how curbs on energy market speculation may impact oil prices, with at least one major bank boldly expecting the new rules will trigger a 30 percent price plunge.
The outcome holds wide ranging implications for G20 developed nations collectively spending as much as $4.8 trillion to stimulate their economies through the worst global recession in decades.
"Regulators don't and shouldn't talk about trying to influence prices," said John Brodman, a former Deputy Assistant Secretary at the U.S. Department of Energy. "But there's a growing political imperative out there. An oil price rise of $30 a barrel would offset 40 percent of the stimulus spending. That's not what these countries are looking for."
The U.S. Commodity Futures Trading Commission is moving to tighten regulation, working with more than a dozen overseas regulators to apply rules on exchanges where commodities trade. The CFTC is expected to impose federal position limits in oil and natural gas markets soon.
The new rules may end exemptions that allow banks, funds and retail investor groups to build large positions unchecked.
So far, the CFTC push hasn't kept most analysts from forecasting oil prices will rise, spurred by higher fuel demand as the world's biggest economies regain steam.
"Overall, we think that it is way premature to call a market collapse due to potential limits in energy markets," said Olivier Jakob at consultants Petromatrix in Switzerland.
But some believe the new rules could hit oil prices hard. "It's a bold view," said Eugen Weinberg, head of commodities at Germany's Commerzbank. "But we're convinced that regulation is coming and markets will react."
Commerzbank reduced its oil price forecast 27 percent, predicting oil may fall from more than $70 a barrel now, to $50 by the end of the year, and an average $55 in 2010. Commerzbank's outlook is uncommon. A Reuters poll of 30 analysts this week showed the consensus oil price forecast rose for a fifth straight month, with barrels expected to fetch $73 in 2010.
The full story from Reuters here: http://www.reuters.com/article/GCA-Oil/ … BL20090827