The CFTC and Wall Street are upset about a leak by Bernie Sanders that shows exactly who held what positions when crude futures topped $140 in 2008.

Yahoo!Finance reports U.S. oil speculative data released by Senator sparking ire. However the article does not disclose the participants.

Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike.

In a June 16 e-mail reviewed by Reuters, a senior policy adviser to Sanders discusses how his office received private data with the names and positions of traders and forwarded it exclusively to a Wall Street Journal reporter.

The e-mail, which also attaches two files with the data, was sent to Public Citizen’s Tyson Slocum asking him to review it and speak with the newspaper about his observations.

The leaked information has sparked concern at the Commodity Futures Trading Commission, which is legally prohibited from releasing confidential information that identifies trader positions and identities.

The leak also raises broader questions as U.S. regulators gear up to collect massive new amounts of private data from market players on everything from swaps and hedge funds to blueprints for how large financial firms can be liquidated. The breach of data could make Wall Street less reluctant to hand over sensitive information if they fear it is not appropriately safeguarded.

“This type of incident will have a chilling effect on derivatives trading in the U.S. because market participants will be reluctant to take the risk that their positions will be exposed to the public-and their competitors,” John Damgard, president of the Futures Industry Association, said in a statement sent to Reuters.

People familiar with the matter say the data later obtained by Sanders was first formally requested by the U.S. House Energy Committee. From there it somehow migrated over to the U.S. Senate.

From Bernie Sanders’ Website

August 19th, 2011

Inquiring minds may be interested in what Bernie Sanders’ Website has to say about the matter.

Rampant Oil Speculation Data revealing rampant oil speculation in 2008, supplied by Sen. Sanders’ office, emerges as the Commodity Futures Trading Commission (CFTC) comes under mounting pressure to complete new rules that would set much tougher limits on speculative trading in energy and metals markets, Reuters and The Calgary Herald reports. Sanders said he felt the data needed to be publicly aired.

“The CFTC has kept this information hidden from the American public for nearly three years,” Sanders said. “This is an outrage. The American people have a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.”

Oil Speculator Scapegoats

Many debate whether speculators can influence the price of oil. I think they can. However, blame should not go to oil speculators, but rather to the Fed for injecting massive amounts of liquidity seeking a home.

The Fed wants to support housing prices and foster jobs creation. However, the Fed can only supply liquidity, it cannot dictate where it goes or if it goes anywhere at all.

Another piece of the blame goes to public unions and their ludicrous pension plan assumptions.

Most public pension plans need 8.5% annualized returns and they are not going to get it from US treasuries or US equities. This encourages the funds speculate in commodities, accumulating a rising number of oil futures over time.

Looking back to the Greenspan era, one can blame the Fed for the holding interest rates too low, too long. On a continual basis, one can blame both Congress and the Fed for actively debasing the US dollar, thereby fueling the desire of market participants to hold hard assets.

In this sense, increased speculation is not a cause of rising oil prices but rather a symptom of other fundamental problems.

Mike “Mish” Shedlock


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