CFTC to Examine Limits on Energy Futures

By Marcy Gordon

WASHINGTON -- Federal regulators will examine whether the government should impose limits on the number of futures contracts in oil and other energy commodities held by speculative traders, the head of the Commodity Futures Trading Commission said Tuesday.

The agency will hold a public hearing later this month to gather views from consumers, businesses and market participants on the idea of new limits for energy futures contracts, CFTC Chairman Gary Gensler said in a statement. It will be the first in a series of hearings in July and August on various topics to determine how the commodities agency "should use all of its existing authorities to accomplish its mission," he said.

The move comes against a backdrop of concern in Congress and complaints by traders over speculation in the oil futures market.

By law, the CFTC sets limits on the amount of futures contracts in some agricultural products that can be held by each market participant to protect the market against manipulation. But for energy commodities -- crude oil, heating oil, natural gas, gasoline and other energy products -- it is the futures exchanges themselves that set the position limits if they desire to do so.

"This different regulatory approach to position limits for agriculture and other physically delivered commodities deserves thoughtful review," Gensler's statement said. "It is incumbent upon the CFTC to ensure a fair and transparent price discovery process for all commodities."

Oil traders and brokers have griped that funds traded on exchanges, such as the United States Oil Fund(OIL Quote), have pumped billions of dollars into energy commodities -- enough to artificially prop up energy prices.