US CFTC finds no evidence of manipulation in gas price rise

Washington (Platts)--30Aug2004

The US Commodity Futures Trading Commission on Monday said the results of its
seven-month investigation into the sharp price increase that occurred in the
natural gas market in late 2003 has found no evidence of manipulation and was
instead the result of colder-than-expected weather in the Northeast US and
projections on storage. 

The agency said its investigation, which began in early December 2003, "did
not uncover evidence that any entity or individual engaged in activity with an
intent to cause an artificial price in natural gas in late 2003." Rather, the
CFTC said, "the increase in natural gas prices during that time was the result
of distinct factors, including market reaction to colder-than-expected weather
in the northeast US during the first week in December 2003, and market
statements and projections regarding the inventory of natural gas in
underground storage caverns made in late November [and] early December 2003."

The CFTC's said its investigation included the extensive review of documents
and audio recordings produced by numerous companies and individuals in the gas
markets, including physical and financial traders, industry analysts, and
operators of natural gas storage facilities, as well as testimony and
interviews of dozens of individuals. 

"Under the Commodity Exchange Act, the primary and chief responsibility of the
CFTC is to ensure that the markets that it regulates are free of manipulation
and fraud. The CFTC recognizes that confidence in the gas markets is partially
based on the timely flow of clear and accurate market information," the agency
said in a statement. "The CFTC's interest is to ensure that the pricing of any
contract is a function of market participants. 

The CFTC will continue to monitor market information and aggressively pursue
any individual or entity that intentionally seeks to undermine the integrity
of futures markets.

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