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Latest oil-price investigation targets traders

Oil & Gas Journal

In its statement announcing the investigation, the CFTC reported an agreement with the UK Financial Services Authority and ICE Futures Europe increasing the exchange of information about commodity contracts with US delivery points.

Although the statement didn't say so, that move responds to concern about the so-called Enron loophole, which exempts from CFTC oversight forward contracts traded outside the US covering US commodity deliveries.

The statement also reported measures to enhance the transparency of index trading.

Whether misbehavior in any of these areas can account for recent leaps in the price of crude oil is questionable.

Yet individual traders of various types have been known to misbehave, sometimes with spectacularly damaging consequences.

Oil companies don't benefit from anything that distorts markets, including trading shenanigans. They should applaud government exertions to keep markets honest.

But they'll face guilt by association if the CFTC probe uncovers trading irregularities anywhere.