Oil Inquiry Widens to Trading Houses
The European Commission investigation into the possible manipulation of energy price benchmarks has widened, with Brussels seeking new information from trading houses, including Glencore, following last week's raids on oil majors.
The Commission has sent requests for information to Swiss-based commodities titans Glencore, Vitol, Gunvor and Mercuria, and possibly others, according to people familiar with the situation. The companies declined to comment. There is no suggestion that the trading houses are under investigation.
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"They are very generic questions – we are being asked for help, almost as a witness," said an official at one Geneva-based trading house. Another official at a different trading house added: "It was just a question of time. Everyone and anyone who has any relation to oil trading will receive a request for information."
The requests follow last week's raids on BP, Royal Dutch Shell and Statoil of Norway. The London offices of Platts, the price reporting agency, were also raided. Brussels last week also asked for information from Eni, the Italian oil major, and from Finnish refiner Neste Oil, the companies said.
The probe into oil benchmarks comes in the wake of the scandal over the manipulation of Libor rates and months after one of Europe's largest energy trading groups warned of "inaccurate pricing" of crude and oil products.
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The European Commission last week said several raids had taken place over concerns that "companies may have colluded in reporting distorted prices to a price-reporting agency to manipulate the published prices", adding that it was concerned that "companies may have prevented others from participating in the price assessment process, with a view to distorting published prices".
Statoil said that the "suspected violations" were related to the way prices for crude oil, refined oil products and biofuels are assessed by Platts in a process known as "market-on-close", and "may have been going on since 2002".
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Platts last week said that regulators had "undertaken a review at its premises" in "relation to the Platts price assessment process".
Price-reporting agencies publish data that underpin billions of dollars of trading in crude, refined oil products, natural gas, biofuels and electricity and affect household energy bills. Platts, a unit of New York-listed McGraw-Hill Financial, relies heavily on bid and offer quotes, as well as actual transactions, to assess prices. That model has been under scrutiny by regulators post-Libor, although price-reporting agencies reject comparisons between their assessments and Libor.
The probe into energy price benchmarks comes after Iosco, the umbrella group of financial regulators, backed away late last year from tough proposals for regulation of price-setting in the oil market. The regulatory climbdown came despite Iosco arguing in an internal report that "the recent Libor settlements illustrate the vulnerability of [energy] benchmark setting processes to potential manipulation".
The price anomalies that the commission is looking at could be in the region of a few cents per barrel.