June 30 (Bloomberg) -- A bill approved by the U.S. House of Representatives designed to reduce energy-market speculation may have limited effect, as contracts on crude oil futures fell to the fewest in the past 15 months last week.

``The need to hedge and opportunity to get exposure to commodities will not go away because of more restrictive requirements on regulated exchanges,'' Keefe, Bruyette & Woods Inc. said in a report June 27, the day after the House approved the measure. ``Market participants will find alternative ways to transact away from regulated transparent exchanges.''

Open interest on the New York Mercantile Exchange on June 25 was the lowest since March 8, 2007, according to data from Nymex. Oil has more than doubled from $61.64 that day, surpassing $142 per barrel last week. Futures contracts are one measure of how active speculators are in energy markets.

The chart of the day shows oil prices (white line) and open interest (red line) since the start of 2007. Futures contracts peaked at a record 1.58 million on July 16 even as crude has almost doubled since. There were 1.29 million on June 25 and 1.30 million the following day, according to Nymex.

Commercial users, which include energy companies selling future production as well as oil-index investors, have switched their net position from short 102,835 in the beginning of March, when crude first closed above $100 per barrel, to long 4,635 last week.

`Explosion of Speculation'

``The explosion of speculation in the oil futures market could be driving up prices from $20 to $60 per barrel,'' House Speaker Nancy Pelosi said in a statement after the measure was approved June 26. ``We put oil speculators on notice.''

The House measure calls on the Commodity Futures Trading Commission to use its emergency powers to ``curb immediately the role of excessive speculation'' in any market it oversees in which energy futures or swaps are traded.

An emergency in commodity markets is defined as ``threatened or actual market manipulations or corners,'' any domestic or foreign government decision affecting prices, or ``any other major market disturbance which prevents the market from reflecting supply and demand,'' the CFTC said in a statement.

The agency ``has never exercised emergency power based on price trends that have developed over months or years,'' the statement said. Emergency powers have been invoked four times since the CFTC was formed in 1976.

The measure needs to be passed by the Senate and signed by the president before becoming law.

Requirements that ``are too restrictive might also effectively push business off exchange venues onto the more opaque over-the-counter market,'' the Keefe, Bruyette report said.

To contact the reporter on this story: Lee J. Miller in Bangkok at lmiller@bloomberg.net

Last Updated: June 30, 2008 01:02 EDT