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Energy speculators to flee U.S. markets?

  |   July 8, 2009 at 11:02 AM
LONDON, July 8 (UPI) -- Energy traders may flock to less-restrictive markets in London following moves by U.S. regulators to consider measures to curb market speculation.

The U.S. Commodity Futures Trading Commission announced it would review the rules and regulations on energy traders as speculation is often blamed for volatility in the global oil and gas market.

"My firm belief is that we must aggressively use all existing authorities to ensure market integrity," said CFTC Chairman Gary Gensler.

The Organization of Petroleum Exporting Countries in June noted that "unprecedented" volatility in energy prices in 2008, which it blamed on market speculation, coupled with the global financial crisis led to dwindling oil demand, culminating in stock surpluses and a steep price decline.

But traders said strict regulation on U.S. markets may push investors away from the United States toward looser markets in London and Dubai, The Daily Telegraph reports.

Market analysts and energy traders, however, say speculation has very little to do with price volatility in terms of oil and gas.

"These contracts affect supply and demand no more than the betting at a racetrack affects the speed of the horses," said Michael Cosgrove, who heads energy matters at the New York broker GFI.

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