Thursday, August 06, 2009
Thursday, 06 August 2009
Crude oil prices, subject to a probe by U.K. regulators, are being determined by the smallest number of cargoes in at least two years as North Sea fields close for maintenance. The CHART OF THE DAY shows planned shipments of North Sea Brent, Forties, Oseberg and Ekofisk crude this month will average about 1 million barrels a day, the equivalent of 53 cargoes, based on data compiled by Bloomberg. These grades are benchmarks for about 60 percent of the world's oil, according to pricing agency Platts. In July, there were about 73 cargoes.
Britain's Financial Services Authority called oil traders, brokers and hedge funds to a meeting in Canary Wharf, London, today to examine commodities-market regulation. Lawmakers on both sides of the Atlantic have called for greater limits on speculation to avoid price swings that resulted in oil rising to a record $147 a barrel last year.
"It doesn't take much to actually control the global oil price," Chris Cook, an oil-industry consultant and a former director at London's International Petroleum Exchange, said in a telephone interview. "If you have got 50 or so cargoes, that's only about $2 billion."
Cook, who testified to U.K. lawmakers last year, says a transatlantic commission should be convened to review the operation of the Dated Brent market. Regulators need to focus on the physical oil markets, where manipulation is made easier by the limited volume of oil used to decide prices, he said.
The IPE was bought by Intercontinental Exchange Inc. in April 2001 and is now known as ICE Futures Europe. The exchange no longer has open-outcry pits and all trading is done electronically.