I'm not totally clear on the process.
I remember reading somewhere that trading oil futures is a relatively recent practice, and that it was not "allowed" in the past.
As to who it is that "allowed" oil to be traded on the market, I can't recall, and am unsure if the article even explained that part.
It may be the Stock Market itself that determines what is traded, may be the FTC, but "somebody" is in charge of those decisions, and could take action to curb this speculation.
It often takes time to get a new instrument approved, but once something has been approved and has become as widespread as oil futures there’s no way an administrative agency could ban it. Even if Congress itself attempted a ban (which would never happen), it would be ineffective since trading could just move overseas.
But I don’t see any reason to regulate oil futures. Speculation may be pushing prices above what they otherwise would be now, but this same speculation (assuming it is based on reasonable assumptions about future supply and demand) would then help stabilize prices over the long term, as higher prices now mean somewhat higher supply in the future, when prices would otherwise be still higher.