A U.S. lawmaker on Wednesday asked futures regulators to probe the larger effects of high-speed trading in the oil markets after crude futures prices took a brief unexplained plunge earlier this week.
Representative Edward Markey, a Democrat, asked the Commodity Futures Trading Commission to expand its review of the rapid price drop to include the larger effects of high-frequency trading. The congressman from Massachusetts is the ranking member of the House Committee on Natural Resources.
"If large Wall Street computers are effectively running our oil markets, this high-frequency trading 'cheetah' technology may really be nothing more than 'cheater' technology," Markey said in a letter to CFTC Chairman Gary Gensler.
Brent crude prices plummeted more than $3 in a matter of minutes just before 2 p.m. EDT (1800 GMT) on Monday as trading volumes - which had been muted by the Rosh Hashana holiday - shot up. U.S. crude slid from $98.65 a barrel to below $95 during the period.
It was not immediately clear what caused the price plunge.
CFTC officials are looking into the matter. The U.S. regulators are in touch with UK regulators and the exchanges where the oil contracts trade as part of the CFTC's review.
CFTC Commissioner Bart Chilton told Reuters on Tuesday that a trader pressing the wrong key was not the likely cause of a price drop.