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Page added on January 28, 2010

IEA to Meet CFTC and OPEC on curbing oil price speculation

The IEA is to meet with OPEC, banks and US and UK regulators in Tokyo in February 2010 to discuss limiting oil price speculation.

IEA Executive Director Nobuo Tanaka said today he has asked US Commodity Futures Trading Commission Chairman Gary Gensler, officials of the UK Financial Services Authority, and bank executives including Lawrence Eagles, head of commodities research at JPMorgan Chase & Co., to take part. The two-day meeting will start Feb. 25.

The CFTC has proposed curtailing investments by large banks and swaps dealers in oil, natural gas, heating oil and gasoline amid concern speculators drove crude prices to a record $147.27 a barrel in 2008. Speculative net-long positions in oil futures, or bets prices will rise, were the highest in at least 27 years in the week ended Jan. 12.

“OPEC and regulators must have come to the conclusion that a flow of big money from bloated global banks into the commodities market is responsible for big swings in prices for oil and metals,” said Tetsu Emori, a chief fund manager at Astmax Co. Ltd. in Tokyo. “Like President Barack Obama, regulators may have to take decisive measures to limit investment by banks.”

Obama proposed last week to limit the size of banks and prohibit them from investing in hedge funds and private equity funds as a way to reduce risk-taking and prevent a repeat of the credit crisis.

“Obama’s proposal would change banks’ behavior, and we should watch closely to see if it is going to affect the energy market,” Tanaka said in an interview in Tokyo today. “Stable energy prices are vital to fueling sustainable economic growth in China and India in coming years.”

The proposed meeting follows a roundtable in Tokyo last April, where ministers of OPEC and 13 Asian nations agreed to look for ways to contain price volatility. OPEC unveiled a plan in January last year seeking regulations to cap speculative trading by investors who buy oil without planning to use it.