Big Oil Price Swings Caused by Investors, Report Says

WASHINGTON (Reuters) — Institutional investors caused the rapid rise and fall in crude oil prices in 2008, according to an independent report released by lawmakers on Wednesday. The report, co-authored by the portfolio manager of Masters Capital Management, said from January to May 27 index traders poured $60 billion into commodity markets, causing a big spike in oil prices. When Congress began holding hearings about speculation from May to July, traders pulled $39 billion from the market, the report says. The report was released on Capitol Hill as part of an effort by some members of Congress to crack down on what they believe is excessive speculation in oil markets. Oil hit a record $147 a barrel in July, then started falling until it hit $102 this week.

VIENNA — OPEC oil ministers agreed Wednesday to trim overall output by more than 500,000 barrels a day in a compromise meant to avoid new turmoil in crude markets while seeking to bolster falling prices. The news sparked a modest rebound in oil prices. Yhe decision could have the psychological effect of steadying eroding prices at or above the $100 mark — the red line for many OPEC nations concerned about their rapid loss of revenue in recent months.