Saturday, June 25, 2011

Government Leak Before Announcement on the Sale of Oil from Strategic Reserves

U.S. commodity regulators are examining suspicious trading in oil futures markets ahead of Thursday's news that countries around the world would release crude from strategic stockpiles, a person familiar with the matter said, reports WSJ.

More from WSJ:
The fact that oil prices sank hours before the International Energy Agency announced a coordinated release of 60 million barrels of oil could indicate that some market participants got wind of the decision early, the person said. Traders also have raised the possibility of a leak.

The Commodity Futures Trading Commission is reviewing market data to find clues as to whether some traders may have received an advance tip on the IEA's plan, the person said...

Trading on leaked data isn't illegal in commodity markets, and companies often use inside information to gain an edge. That is in contrast with the more tightly regulated stock markets, where investors can be prosecuted for trading on material, nonpublic information...

Any major decision by the IEA is made in consultation with its 28 member nations that include many of the world's biggest oil consumers. "Twenty-eight countries—it's tough to keep a secret," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I don't know how you keep a secret from the oil market when there are that many countries involved."
There is a lot more insider trading by government officials than is generally realized. Just ask Dick Durbin. Or you could ask Goldman Sachs. Or the Federal Reserve.

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