Hedge funds reduced positions in oil futures as prices rose, probe started

Many Congressional officials and consumer groups have asserted that institutional investors and other speculators have manipulated oil prices and driven them 'artificially higher.'

Others, including oil executives, argue that the price increases have more to do with the sector's bullish fundamentals - - including inadequate global crude oil production growth amid global rising demand.

Oil Analysis: The CFTC will have a great deal to chew on, concerning causal variables, including: the dollar, geopolitical risk, oil as an asset class, oil as an inflation hedge, production complications, and of course, rising global demand. And while the CFTC inquiry's report will make for required reading in many Washington and Wall Street circles, it seems highly unlikely that the report will prove that various investors coordinated their buying on long contracts to artificially boost oil's price.

What's the report more likely to show? A tepid stock market, the by-product of a sluggish U.S. economy, led to an oil-long futures frenzy among hedge and investment funds, once it became clear oil would earn out-sized returns for several years.