Merc Probing Inflammatory Rumor

The world’s largest energy exchange is trying to find the source of a rumor that flared through the market Monday, spurring oil prices in the last minutes.

On the New York Mercantile Exchange, prices for crude oil had traded modestly lower through most of Monday’s session. Late in the day they shot up to $31.60 from $29.85 minutes earlier. The October crude contract settled at $31.30, up $1.26 on the day.

Behind the price move was a false story that Iraqi troops were moving toward Jordan. The rumor, which hit various financial markets in New York late Monday, including the Merc, spawned fears that Persian Gulf tensions were escalating.

“We’ve talked to people and are trying to get a handle on it,” said Neal Wolkoff, the Merc’s senior vice president of regulatory affairs and operations.

The federal Commodity Exchange Act calls for a maximum fine of $500,000 and up to five years in prison for someone convicted of purposely spreading false market information.

But chances of pinning down the source of the rumor are slim, Wolkoff said. He noted that attempts by the exchange to do so in other instances have been unsuccessful.

“It’s very hard to distinguish someone who is repeating the rumor from someone who actually originated it,” he said.

Merc officials have interviewed several people but have found no potential culprits, he said.