The Commodity Futures Trading Commission’s long-awaited announcement on January 14 of a new policy on controlling energy speculation was greeted in the market with quiet relief and satisfaction.
The CFTC has proposed setting position
limits for futures and options on the most important US energy
products: light sweet crude oil, Henry Hub natural gas, New
York Harbor No 2 heating oil and New York Harbor gasoline
But the consensus is that the proposed
limits are quite high and would affect few players.
There will still be exemptions for "bona
fide hedging" and for "certain swap dealer risk management
transactions" – and crucially, the over-the-counter
market is not affected.
"It doesn’t sound like
onerous regulation," said Michael Wittner, an oil analyst at
Société Générale in London. "Levels
are set high intentionally so as to enforce little liquidation,
if any. It seems clear to me they’ve made a very
conscious decision not to rock the boat."
Amrita Sen, a commodities analyst at
Barclays Capital in London, said: "[The announcement of
proposed regulation] hasn’t had much of an impact
on prices today. Fundamentals remain the key drivers."
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