Biden Spurs Regulatory Scrutiny of Oil Market; Also This Commodity Index Remains Way Overweight Fossil Fuels

The Federal Trade Commission “is concerned about this issue, and we are looking into it,” the regulator said of the oil-related markets, according to the Financial Times.

US President Joe Biden had called on the commission to investigate whether the country’s biggest oil companies including ExxonMobil and Chevron are engaged in “potentially illegal conduct” that is resulting in higher gasoline prices for Americans.

The Board of the International Organization of Securities Commissions (IOSCO) is seeking feedback on proposed revisions to its 2011 Principles for the Regulation and Supervision of the Commodity Derivatives Markets.

“IOSCO also considered the importance of mitigating the impact of unexpected disruptive external events, such as spikes in oil prices or the COVID-19 pandemic, on commodity derivatives markets and how the principles might help address such events,” it said three days ago.

The FT also published this comment: “How many times has the FTC investigated gas prices and turned up nothing? It’s a political stunt,” said Robert Campbell, head of oil products at consultancy Energy Aspects.

Overall, the crude oil market IS apparently tight as demand jumps as economies recover from the global pandemic. So higher prices are warranted to some degree. And trading levels are apparently buoyant, which can boost weightings in commodities indexes.

According to an Oct. 29 notice on its website, the Bloomberg Commodities Index is funnelling extra investment into fossil fuels (“energy”), which has a weighting of 39.8% of the index, 6.8 points above the weighting “restriction”. See this snip:

Bloomberg Commodities Index

https://assets.bbhub.io/professional/sites/27/BCOM.pdf

IOSCO doc: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD689.pdf

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