Federal regulators said they will place stricter limits on foreign exchanges that trade U.S. oil as concerns continue to grow about the role of speculation in rising fuel prices.
Some lawmakers said the move was long overdue.
The Commodity Futures Trading Commission said it will require the London-based ICE Futures Europe exchange to adopt position limits used in the U.S. for the trading of the West Texas Intermediary crude-oil contract, which is linked to a similar contract on the New York Mercantile Exchange.
Under the new agreement, foreign officials also will share daily trading data with U.S. authorities and report violations when they are uncovered. Previously the groups shared data on a weekly basis.
Atlanta-based Intercontinental Exchange Inc., parent company of ICE Futures Europe, plans to comply with the new rules and said the CFTC action would have almost no impact on its customers or business.
Lawmakers, who are increasingly are blaming speculation by index funds and other large investors for artificially boosting the prices of oil, corn and other commodities, greeted thee CFTC announcement with skepticism at a hearing to assess the agency's performance.
"Why didn't we do this nine to 10 months ago when things first appeared to be moving faster than usual?" asked Democratic Sen. Ben Nelson. "The sense of urgency on the street seems to be different from the sense of the bureaucracy. We need to match that urgency."
Light, sweet crude for July delivery was trading near $134 a barrel on the Nymex Tuesday afternoon, up nearly 35 percent since the beginning of the year.
CFTC Acting Chairman Walter Lukken previously had told Congress oil prices appeared to reflect market fundamentals. He pointed to the declining value of the dollar and rising demand in developing nations as a major factor behind the multiyear ascent in oil prices.
But in the past month the agency has taken a flurry of actions to gather more data on unregulated trading, including over-the-counter swaps.
Considering the limited view the CFTC has of the futures market, Democratic Sen. Byron Dorgan questioned whether regulators know enough about the markets to gauge the effect of speculation.
"If you don't have the foggiest idea what percentage of total contracts you are regulating you wouldn't have a clue whether there is excessive speculation in the markets," Dorgan said.
Lukken has said his agency's powers were mainly designed to uncover deliberate manipulation, not the effects of larger trading trends. Republican Sen. John Thune asked Lukken whether he could rule out market manipulation as a source of rising oil prices.
"No, I can't. But we are looking for it and policing it aggressively if we find it," Lukken said. "Policemen can't always prevent crime, but you try to stop it as soon as you can."
He stressed the need for increased agency funding, telling lawmakers the CFTC's staffing levels have dropped 21 percent in the last seven years, while commodity trading has skyrocketed.
"We have reached our limit and cannot uphold our mission without immediate additional resources," Lukken said.
UAL Corp.'s United Airlines on Tuesday endorsed a bill introduced last week that would give the CFTC additional power and resources to oversee commodities markets. The Chicago-based carrier said its fuel bill this year will hit $9.5 billion based on current prices, more than $3.5 billion higher than last year.