ERMUSR MISC ISSUES 11-09-2004 - Laserfiche WebLink

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• Energy Firms Are Put on Notice Continued Prong Page Cl such as extraordinarily high prices or trad- counter natural-gas and electricity mar- ing volume"we would certainly look at the kets in the U.S. has been badly shaken in market with a fine-tooth comb." An IPE recent years by the collapse of Enron spokesman wasn't available to comment. Corp. and subsequent revelations that The FSA said it solicited information traders there and at other energy compa- from companies and visited 15 firms, but - - nies tried to manipulate markets. Ana- it said that not all companies contacted - l lysts generally consider international oil "were willing to respond to our voluntary -- markets much larger and more liquid, information request," according to the and thus harder to manipulate. letter. The spokesman said the agency Heavy investment in commodities by would pursue problems privately with in- hedge funds, pension funds and other fi- dividual companies. nancial players is one factor behind the London has long been home to a thriv- 67%jump in oil prices over the past year, ing, but largely unregulated, over-the- though many analysts put greater empha- counter energy market. In 2001, the FSA sis on fundamental factors such as soar- launched what it describes as a "light ing petroleum demand in China and sup- touch"regulatory regime for oil and energy ply disruptions in key oil regions from traders. The system is similar to that for Iraq to the hurricane-torn Gulf of Mexico. financial markets in London, but with less "Although failures of compliance with oversight and fewer restrictions because regulations have not caused market tur- the agency determined energy markets bulence or loss of market confidence, we were designed for professional traders and consider that there is a potential for this had little direct small-investor participation. to happen," the FSA said in its letter. Prices for U.S. and London bench- A Nymex spokeswoman said that dur- mark crude futures have soared by about ing times of unusual market dynamics, two-thirds in the past year and recently Tuesday.October 12, 2004 hit record highs in nominal terms.Adjust- Commodity Indexes REr YR ing for inflation, oil remains cheaper CLOSE (HG AGO now than it was after the oil shock follow- Dow miles-AIA Futures........... 154,139 -1932 121.391 ing the 1979 Iranian revolution. Dow tones-AIG Spot_..._.. 101.194 -]904 16133 - - RemesuR I5336e 156149 Rene„c a Futures 2e4 42 -3.82 247 75 Futures listings appear on 1 e C16.