Davis, A (2008, September, 4). Oil-supply data probed for manipulation CFTC regulators look at energy firms, take depositions about oddball trading. The Wall Street Journal, Retrieved September 4, 2008, from 'http://online.wsj.com/article_print/SB122049453060297811/html’
Article Summary:
In the Thursday’s edition of the online Wall Street Journal, Ann Davis reports the investigation conducted by commodity market regulators that accuses un-named energy firms of falsifying data on their supplies. The investigation seeks to identify whether some companies among the oil-industry, are manipulating oil prices by providing incorrect information about inventory levels to the Energy Information Administration (EIA) to affect the market in their favor. By underreporting their inventories crude suppliers can cause price jumps in the market making it seem that there is a shortage of crude. When the price jumps the suppliers sell their crude at the higher price for more profit. The Commodity Futures Trading Commission (CFTC) started their investigations after the unusually large price jumps in July of 2007. The EIA has initiated the investigation into the reporting of crude supplies to ensure their accuracy. Even though the EIA does not check the accuracy of the reports by going and looking inside of the tanks, they continue to study the market to see whether or not the data follows market trends. CFCT claimed it had already announced an enforcement action to ensure that the oil market functions well in addition to the hiring of contracted consultants to increase their manpower. The article exposes that the investigation is researching the week spots in the markets to better understand how the suppliers can influence the price in their favor. Word over speculations that some suppliers are putting crude in offshore barges to lower their on-land inventory is also described. Furthermore, the CFTC is looking into unethical and unlawful reporting methods that could make...