America’s top futures market regulator will be invited to give evidence in London as part of a full parliamentary investigation into possible manipulation of the oil market, The Times has learned.

MPs on the House of Commons’ powerful Treasury Select Committee are set to unveil details of the investigation next month, after they were left dissatisfied with findings from an initial inquiry into oil market regulation held last month.

A spokeswoman said it was “highly likely” that the committee, chaired by Labour MP John McFall, would push for a full parliamentary inquiry when Parliament returns from its summer recess.

Nick Ainger, MP, who is also a committee member, said that among those who would be invited to give evidence are Walter Lukken, chairman of the Commodity Futures Trading Commission (CFTC), which has launched a series of initiatives designed to stamp out alleged market abuse in the US in recent months.

He said top oil market traders from big investment banks, such as Goldman Sachs and Morgan Stanley as well as hedge funds, are also expected to participate.

Mr Ainger said he wanted Mr Lukken to explain the CFTC's position and to draw comparisons with the regulatory environment in Britain.

The London oil market has come under sustained attack in recent months, particularly among US politicians seeking a scapegoat for soaring global oil prices, which hit a record high of $147 last month.

Oil prices have since fallen by around 18 per cent to around $118 today, but the investigation is likely to focus on the role of the British Financial Services Authority, which has been criticised for adopting a weak regulatory approach towards alleged market manipulation.

The CFTC has launched an investigation into alleged manipulation and wants to extend US-style trading limits to the crude oil futures contract traded on ICE Europe, the main London oil futures exchange.

The proposals, which could come into effect this autumn, are intended to stop traders evading position limits in the US by trading on ICE Europe, a practice that American critics have called the "London loophole".

The select committee will host oral testimony sessions, starting in October, which could run until Christmas. A report will be published in the New Year.

The British regulator was criticised last month for not having brought a single enforcement action for commodity market manipulation in the past five years, despite dozens of such actions being brought in the US.

Speaking at the same hearing, Mr Ainger said that the lack of transparency and basic information about the size of the global oil market rendered the FSA's claims that there was little evidence of market abuse meaningless.

"What is coming out is that there is a lack of information about the market," he said. "How do you know there is no market manipulation?"

Chris Cook, a former regulator at London’s International Petroleum Exchange (IPE), who gave evidence at the hearing last month, said there were still big unanswered questions about the functioning of the oil markets.

Fresh details of the inquiry have emerged, despite a marked weakening of global oil prices in recent weeks.

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