The company’s website states they offer a “broad range of arbitrage activities, which are becoming more and more sophisticated in form.” It seems their “sophistication” has landed them in the middle of probe by the CFTC, the U.S. futures market regulator.

Optiver’s main office is located in Amsterdam, Netherlands. They operated in many different markets, including the Euronext in Amsterdam, Brussels and Paris; Eurex, the German-Swiss Options Exchange; Xetra, the German Stock Exchange; the London Stock Exchange in the UK; LIFFE, the UK Options Exchange; the Australian Stock Exchange and Australian Options Exchange; Virt-X, the Pan-European Stock Exchange; and Amex, the American Stock Exchange, PHLX, CME, CBOT, CBOE, ICE and ISE.

Within these markets they actively engaged in the purchase and sale of equity options and underlying shares in leading companies; equity-index derivatives; baskets of shares: government bonds, cash and derivatives; commodities; foreign exchange in spot and derivative markets; convertible notes; customized products or market request for over-the-counter (OTC) options; sector-index derivatives; derivatives on pan-European indices; and exchange traded funds (ETF).

This announcement is the first case in the agency’s broad probe in to crude oil market manipulation. The probe was launched in December 2007 to delve “into practices surrounding the purchase, transportation, storage, and trading of crude oil and related derivative contracts.” This is the same period of time that oil prices soared to all time highs.

Optiver is under fire for using proprietary trading software called Hammer that was used to rapidly enter orders before market close to run the price up. The practice is known in the business as “banging” or “marking.” The company attempted “bang” oil prices 19 times last year on the New York Mercantile Exchange (NYMEX) and succeeded 5 times.

Christopher Dowson, Optiver’s head trader, Randal Meijer, head of trading and supervisor of the subsidiaries and the company’s chief executive Bastiaan van Kempen have been named as defendants in the case. In a recorded phone call, Dowson said, “Do the pushing as much as you can in the minute before… in the close don’t try and push it too much harder… just try to defend it let’s say… the idea of it is to attract liquidity…so you may have more chance to sort of bully it the minute before.”

Congress is currently deciding on whether or not to give the regulator greater powers to oversee energy markets. In light of this discovery, more oversight should be done to stabilize oil prices before they are completely out of control and being paid for at the expense of Americans and their families.

This newly found energy thrift has oil investors, many of who are hedge fund companies that have come to the game relatively late, nervous enough to thwart a potential rally.

Since Hurricane Dolly did not threaten the U.S. oil supply chain, there’s no logical reason for a run-up this week. The lower prices of oil are also being reflected at the pump in the form of somewhat lower gasoline prices.

Analysts also believe that once drivers change their habits to less fuel consumption, they’re unlikely to shift back quickly to their old gas-guzzling habits. That could spell doom for oil demand in coming years.

During times like this, some entrepreneurs figure, “hey, I can attract crowds with super low gas prices.” Of course, they’re right. Watch what happens when this ploy is attempted with gas prices at an all-time record high.

People showed up for the free gas, all right. They did to the point where a huge traffic jam ensued, causing even more gas to be burned, and we’re talking about full price gas. In any event, a Broward county Free Gas Giveaway resulted in the radio station who sponsored the event giving away 4,000 gallons of gas.

Today the trading on Wall Street has been choppy, but some analysts, such as Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc., expect better results soon.

“When you have this type of slipping in and out of the plus and minus column — usually that’s an indication that the market is trying to stabilize. But I think we’re going to need capitulation for the market to begin to stabilize,” said Cardillo.

After some initial downs, certain stocks are rebounding behind news that crude oil has bounced off its’ record high.

—Midday stock highlight:

H&R Block (HRB), announced they went from a loss to a profit in the fourth Quarter. “While we are not providing earnings guidance beyond fiscal 2009, we are confident that for the three-year horizon through fiscal 2011, we can realize significant gains in earnings per share through unit growth, greater efficiency in our tax and other operations, and capital deployment, rather than relying solely on annual price increases for growth,” said interim Chief Executive Officer Alan Bennett.

Oil is up, but investors are still hoping for good earnings news.

Analysts and Oil producers agree that excessive paper trading going on the oil commodity futures is to blame for higher fuel costs. These speculators never actually trade the oil, they just sell their lots of futures at a much higher cost.

Some feel that oil prices could significantly fall in 30 days if the Government steps in and regulates.

Senator Bart Stupak (Democrat – Michigan) is spearheading the initiative to impose regulations on oil speculators, called the PUMP Act (acronym for
Prevent Unfair Price of Prices) his act calls for banning Hedge and Pension funds from buying oil futures, making the transactions more transparent and increasing the amount of money an investor has to put down to purchase these futures. Speculators and investors in oil futures are only required to put down 5% – 7% in order to buy them, whereas stock requires a 50% down to buy.

You can definitely see where this leaves a lot of room for abuse.

Not everyone is convinced Federal Regulation is the answer, either. Some fear that this could drive
prices up further by driving oil traders will take their activities overseas and continue to drive the price up.

What are your thoughts? Do you think that Government regulations can help bring down the price of gas?

According to Olivier Jakob, the trend is likely to continue, regardless of fundamental reasons. “Monday and Tuesday crude oil managed to move ahead without the help of the dollar,” he said. “But once we broke above 1.59 euros per dollar and as we move toward 1.60, there’s going to be more buying coming into oil.”

Investors have been putting more money into commodities, and so far have found an above average return, especially as opposed to stock market investing. However, there are warning signs that the price increase in Oil might be slowing. Consumer demand appears to be sluggish, despite the U.S. heading into the driving season.