MARCY GORDON

The Associated Press

WASHINGTON (AP) -Financial firms that play a dominant role in the energy futures market brought their case against broad limits on speculative trading Wednesday to federal regulators.

Speculative trading has been blamed by some market watchers for widening the oil price swings that have punished industries and consumers.

Marking a potential shift for the government, the Commodity Futures Trading Commission may be moving toward setting new restraints on the amount of trading in energy futures by Wall Street firms and other participants that are solely financial investors.

Blythe Masters, head of JPMorgan Chase&Co.'s global commodities group, said any new curbs on the size of trading positions that can be held "must be tailored" to address only excessive speculation. "Efforts must be undertaken with the broader understanding that speculation itself plays an essential role in commodities markets," Masters said at a hearing by the CFTC.

If investors like JPMorgan Chase were discouraged from assuming price risks, she said, oil users that need to hedge risk and rely on financial firms to facilitate that activity "would have much more difficulty entering into transactions" and markets would become more volatile.

JPMorgan Chase and Goldman Sachs Group Inc. are among the biggest players in the energy futures markets.

CFTC Chairman Gary Gensler faulted "excessive" speculation but also underscored the role of financial investors in helping to set fair prices that can benefit consumers.

The agency isn't going to dictate prices, but will use its authority to help ensure "fair and orderly functioning of markets," Gensler said at Wednesday's hearing, the second day of public airing of the issue.

Commissioner Bart Chilton insisted that "going slow is not an option" for the agency in moving to set new limits on speculative energy trading.