Energy Speculation at Highest Levels on Record, CFTC’s Bart Chilton Says

Hedge funds and other speculators have increased their positions in energy markets by 64 percent since June 2008 to the highest level on record, according to data released by U.S. Commodity Futures Trading Commissioner Bart Chilton.

Speculative positions accounted for more than one million energy futures equivalent contracts as of January, according to the data. Positions in metals and agricultural contracts have increased about 20 percent, Chilton said in a speech prepared for delivery today at the Annual Structured Trade and Export Finance in the Americas Conference in Coral Gables, Florida.

Chilton said the data shows the need for the CFTC, as part of the Dodd-Frank financial overhaul, to curb speculation on raw materials such as oil, natural gas and wheat.

“We were given new authority to place limits on speculation as part of the new financial reform law, but we haven’t done that yet and we need to pronto,” he said in a statement before the speech.

The CFTC missed the Dodd Frank Act’s mid-January deadline to enact curbs on speculation. The commission voted Jan. 13 to put out for comment a proposal that would restrict the number of contracts one firm can hold. There is no schedule for the agency to take a final vote on the rules.

CFTC Chairman Gary Gensler told lawmakers the commission wouldn’t meet the deadline because it doesn’t yet have sufficient data. The agency will begin collecting that information in the third quarter of 2011, according to the filing.

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