This summer, the commodities markets went askew. As consumers and manufacturers scaled back on usage, prices and related exchange traded funds (ETFs) still moved higher. Now commodity-focused ETFs are being investigated by the CFTC as possible culprits.

The U.S. Commodity Futures Trading Commission has started a round of public hearings on oil this week, although the relationship between money flows from pension funds, hedge funds and speculative investments to energy prices is still in question.

Chris Kahn for Associated Press has some reasons why oil prices are so hard to track and just who could be behind the volatility in prices:

  • A speculator makes money on fluctuations within market value; they have no intention to use the product in which they are investing. Speculators could be anyone, including pension funds, mutual funds and hedge funds.
  • Speculators may have helped push oil prices to a record $147 a barrel last summer, but it’s tough to say because the government doesn’t track them closely.
  • Regulation isn’t likely to rein in speculation, simply because oil is traded worldwide. The CFTC could influence speculation here, but it has no jurisdiction overseas.

The ETF industry could be affected by whatever decision the CFTC ultimately arrives at. Right now, ETFs use an exemption to grant investors access to futures markets, says Don Dion  for TheStreet.

The CFTC is cultivating  ideas such as a regulatory reach, in which the commodities markets could come down harder on speculators. Even if the price of certain commodities is set by exchanges, the CFTC could curb positions. Providers of the major commodity ETFs are anxiously awaiting word of any regulatory changes that will affect their ETFs.

For more stories about natural gas, visit our natural gas category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.