Oil speculation again - Trading in unregulated dark markets may have signifigantly contributed to oil price rise

Apparently this is the conclusion of a report to be issued by the Commodities Futures Trading Commission:

WASHINGTON — Federal regulators have uncovered evidence that oil speculators operating in unregulated "dark markets" may have helped drive the price of crude oil to record highs this year, McClatchy Newspapers has learned.

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The report isn't expected to declare that speculators are the main cause of the price rise, a conclusion the agency rejected in an interim report in July.

But unregulated markets account for about two-thirds of oil trading on financial markets, and they could be used to manipulate oil prices on the regulated exchanges that account for the remaining oil trading.

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Sen. Maria Cantwell, D-Wash., a sponsor of an anti-speculation bill, said the Masters report challenges CFTC claims that supply and demand forces — and not excessive speculation — has driven up oil prices.

"This analysis illustrates that when oil speculators poured large amounts of speculative money into oil markets, prices skyrocketed just as they were hoping. ... And when the speculative money got pulled out, prices tumbled," she said.

The report from Masters and his partner, Adam White, uses CFTC data to conclude that from January through the end of May, index investors pumped $60 billion into major commodity indexes, and oil prices, pushing a barrel to a record $145.29 July 3 on the New York Mercantile Exchange. Oil then began its descent to fall 26 percent to $109.71 Sept. 2.

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Beginning July 15, a sell-off began, resulting in about $39 billion pulled out, and a $29-per-barrel drop in oil prices.

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McClatchy has learned that some of the speculators doing business with swap dealers — who generally are large investment banks such as Goldman Sachs and Morgan Stanley — have built positions that would be banned in regulated futures markets.