Reply #8: Speculation of another kind....or perhaps just wishful thinking

[chill_wind]

CFTC Investigation Roils the Oilpatch

by StockJockey
Thursday, May 29, 2008 - 6:07 pm

The dramatic decline today in the price of crude oil (USO-AMEX) might be the first act in a drama that plays out over the next several months.

The big money crowd on Wall Street is whispering that an ongoing probe will snare high profile energy traders, hedge funds and government officials from both sides of the aisle. This could get uglier than today's dramatic puke in energy prices. If my sources are on the money, There Will Be Blood by the time this brewing scandal runs its course:

(snip)

Conspiracy theory? Not so fast, charts don't lie. More downside ahead?

see 5-day chart and full article: http://www.1440wallstreet.com/index.php/site/comments/cftc_investigation_roils_the_oilpatch/

Regulators step up probes of trading in oil markets
The CFTC disclosed a broad, nationwide probe into potential oil-market manipulation and will expand surveillance of energy markets.

Ian Talley, Ann Davis And Gregory Meyer, Wall Street Journal
30 May 2008 04:49

"(...)

Still, suspicions have lingered that speculators have helped drive oil prices higher. At a series of congressional hearings over the past month, energy consumer groups and some financial insiders have contended that large investments in commodity futures by hedge funds and pension funds are distorting prices.

Congress is weighing proposals to increase collateral requirements for futures traders and otherwise restrain their activities. The implied hope is that such moves will help rein in prices that have almost doubled in a year.

The CFTC's announcement about its oil investigation suggested a single, broad probe that began in December 2007. But people familiar with its enforcement priorities say the agency is pursuing multiple oil investigations, and that many of them relate to one another. CFTC enforcement chief Gregory Mocek said the agency has about 60 manipulation investigations open in various commodity markets.

The CFTC has expanded an investigation, disclosed previously by The Wall Street Journal, into alleged short-term manipulation of crude-oil prices via a widely used price-reporting system run by Platts, a unit of McGraw-Hill Cos. One suspicion is that energy companies and traders have at times issued a flood of orders during a time window used by Platts to determine its reported prices for physical oil transactions, then used the potentially distorted prices to make profits in other markets. Platts has said its system has safeguards to protect against manipulation. Subpoenas on the matter have gone out in several stages, people familiar with the cases say.

The agency has also been questioning traders about similar activity in the jet-fuel market, people familiar with the matter say.

Another area of concern for CFTC regulators is whether the owners of crude-oil storage tanks use their knowledge to make bets on oil-futures markets. In theory, the owner of a tank could issue misleading information about the tanks being full or empty, leaving the wrong impression about whether oil is in plentiful supply. Then they could make trades to profit on the misunderstanding.

more:
http://www.moneyweb.co.za/mw/view/mw/en/page94?oid=208946&sn=Detail