WASHINGTON -- A coalition of industry organizations has petitioned Congress to pass legislation to rein in "excessive speculation and opaque trading activity" in oil markets.

"In recent weeks . . . crude oil and refined petroleum products have been trading substantially higher, despite record inventories and low demand," the group said in a letter to the leadership of the House and Senate.

"Absent strong and sweeping reform, we will continue to witness extreme price volatility and excessive speculation."

The Commodity Markets Oversight Coalition asked Congress to impose tighter position limits on investors that do not plan to take physical delivery of oil and to allow only "bona fide commercial participants" to obtain exemptions from these position limits.

Position limits spell out the maximum exposure commodity traders may have, often by stating the number of open contracts allowed per trader per month.

The group also asked for tighter oversight of energy trading that takes place away from regulated exchanges, such as over-the-counter derivative deals.

Some items on the oversight coalitions legislative wish list found their way into the language of H.R. 2454, the energy and climate-change bill the House Energy and Commerce Committee approved last month.

Currently, there are federally mandated position limits only for certain agricultural commodities, such as corn and soybean oil.

For certain energy commodities, including crude oil, position limits are set by commodities exchanges, such as the New York Mercantile Exchange.

Those who hold NYMEX futures contracts for light sweet crude, the most commonly traded contract, are limited to 10,000 net futures for any one month, according to the exchange.

Some individuals and groups have attributed last summers record crude oil and fuel prices in part to speculative traders -- such as large institutional investors or hedge funds taking large positions in oil markets by purchasing derivative financial instruments, but didnt intend actually to take delivery of oil. (See Sept. 15 and Aug. 1 Bus & Motorcoach News.)

However, an international task force co-chaired by U.S. Commodities Futures Trading Commission and the United Kingdoms Financial Services Authority reported in March it "did not find evidence that various categories of financial participants, either individually or as a whole, were systematically driving commodity prices" during last summers fuel crisis.

However, the task force said additional oversight was needed to promote greater transparency in energy markets and, "further study of the crude oil market would continue as part of [CFTCs] longer-term activities."