Contrary to reports this morning that the FTC is launching investigations into energy companies and private traders for price-fixing, underproducing, and misreporting wholesale oil (NYSE:USO) transaction costs, the International Energy Agency (-IEA-) now retorts that it does not believe speculation has had a significant impact on recent volatility in oil prices.
IEA man David Fyfe spoke at a think-tank event this morning, addressing the weight of speculative trading on energy (NYSE:XLE) costs, saying, its “difficult to say that they’re [speculators] the primary reason why prices have run up to three-digit levels,” (in reference to April when oil prices hit $114 per barrel). Fyfe continued, “the level of underlying speculation in the market has flattened off or even … declined slightly [since 2008-2009]. So it’s sort of difficult to pinpoint the most recent rise in prices in the second half of 2010 and 2011 and purely lay it at the door of financial market players.”
The FTC launched its investigation yesterday, largely at the behest of congressional representatives such as Washington’s Sen. Maria Cantwell and West Virginia’s Sen. Jay Rockefellar, who are outspoken critics of spec trading on the commodities (NYSE:RJI) markets. The Obama administration also organized a task force earlier this year to investigate possible fraud and trading violations related to energy (NYSE:XLE) prices.