Published May 17, 2013
LONDON/WASHINGTON – A European probe into possible oil price manipulation expanded with the investigation of a small niche trading house in the Netherlands and a key U.S. senator on Friday called for the Justice Department to join the investigation.
Dutch trading house Argos Energies, a mid-sized trading company that deals in physical oil products and owns storage facilities, was visited by inspectors from the European Commission on Tuesday, a source familiar with the investigation said on Friday.
The visit occurred on the same day that authorities raided the London bureau of pricing agency Platts, and the offices of Statoil, Royal Dutch Shell and BP in the biggest cross-border action since the probe into rigging of Libor benchmark interest rates.
In Washington, the chairman of the Senate's energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for U.S. consumers.
"Efforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices," Senator Ron Wyden, the chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to Attorney General Eric Holder.
The U.S. Commodity Futures Trading Commission and Federal Trade Commission have both declined to comment on any role or coordination with EU authorities in the probe. U.S. politicians including Wyden often call for enquiries into issues that may affect gasoline prices, although regulators are not obligated to take action.
A spokesman for the Justice Department would not comment on whether the agency would undertake a probe, but said it was reviewing Wyden's letter.
Authorities have sharpened scrutiny of financial benchmarks around the world since slapping large fines on some of the world's biggest banks for rigging interest rate benchmarks.
Over the past year many observers have noted the resemblance between the Libor self-reported benchmark and the journalist assessment-based methodology used to set most of the world's oil prices, but this week's investigation is the first indication that EU authorities are taking a harder look at the system.
Hungary's Pannonia Ethanol, a recent entrant to Europe's market, was the first company to identify itself as having complained to Brussels over access to the Platts market-on-close (MOC) system - a daily half-hour "window" of trading during which the agency determines prices through a series of bids, offers and trades.
The source said that inspectors were still on the premises of Argos Energies on Friday and that it was also the last day of the inspection at the company.
Argos Energies declined to comment.
NO IMPACT ON LIQUIDITY
Platts said trading in the oil market has not been significantly affected by the investigation.
"Market participation and liquidity are unchanged," Platts editorial director Dan Tanz said.
Meanwhile Neste Oil, a Finnish refinery, said it had received a request from the European Commission to provide information, although it said it was not under inspection.
"We will naturally cooperate with this request and provide the information requested to assist the European Commission in its investigation," Matti Lehmus, executive vice president, Oil Products and Renewables said in a statement.
The investigation is focused on whether there was collusion to distort prices of crude, refined oil products and ethanol traded during the MOC window.
Platts, a unit of McGraw-Hill, provides clients with price benchmarks set by reporters for opaque energy markets.
Its assessments are used to close physical and derivative deals worth billions in a $2.5 trillion market.
Thomson Reuters, parent of Reuters news, competes with Platts in providing news and information to the oil market.
(Reporting by Simon Falush and Timothy Gardner; Additional reporting by Peg Mackey; Editing by William Hardy, Anthony Barker and Phil Berlowitz)