The UK's Financial Services Authority is helping US authorities with an unprecedented investigation into claims of possible market manipulation of the oil market.

The Commodities Future Trading Commission, one of the most powerful regulators on Wall Street, yesterday unveiled a package of measures to prevent “manipulation and fraud” in global energy futures markets.

Hedge funds and other speculators have been blamed repeatedly by both energy companies and oil producing countries for contributing to the sharp rise in the price of crude, which this month broke through the $135 a barrel level.

In a strongly worded statement, the CFTC said the measures would “improve oversight of energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud.”

A spokeswoman for the FSA said it was co-operating with the CFTC and had begun sharing information to ensure proper oversight of the market.

It is understood that there are not yet any specific allegations of improper conduct but the FSA said it was “always happy to co-operate with other regulators to prevent market abuse.”

The CFTC has reached an agreement with the ICE Futures market to force traders using their markets to disclose their trading positions.

Under the new rules, traders with substantial exposure to exchange traded oil contracts will have to report their positions every day.

“The agreement will enhance the amount and quality of the information the CFTC receives regarding crude oil trading in the UK and will enhance the agency’s already vigorous surveillance activity,” the statement said.

Some analysts pointed out that the CFTC’s announcement could have political motives. A Senate hearing was held in Washington DC earlier this month on oil prices, which have become an increasingly hot political issue in the US.

However, others also warned that the threat of market manipulation was real.

“We are living in a very dangerous period,” said Pierre Terzian, director of consultancy Petrostrategies in Paris.

“I have no doubt that people are actively manipulating the market for crude oil and other commodities, including food. The whole world is suffering because of a lack of transparency in financial markets.”

Last year, BP was fined $303 million by the CFTC for manipulating the propane market in 2004. It marked a record fine imposed by the Commodity Futures Trading Commission (CFTC) for market manipulation.

CFTC acting chairman Walt Lukken said at the time that BP had “engaged in massive manipulation - the magnitude of this settlement reflects that the Commission will not tolerate trading abuses in our open and competitive markets,"

The four former BP workers accused of "conspiring to manipulate and corner" the US propane markets were named as Mark David Radley, James Warren Summers, Cody Dean Claborn and Carrie Kienenberger.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts