On Wednesday, the European Commission ramped up its inquiry into the potential manipulation of oil and biofuel prices, as investigators continued to question BP, Royal Dutch Shell and Statoil about their trading activities. Oil is one of the murkiest markets. Much of the vast global oil trade occurs away from regulated financial exchanges, as companies and traders buy and sell billions of dollars of crude oil each day and ship it around the world. http://www.nytimes.com/2013/05/16/business/global/inquiry-on-potential-oil-price-manipulation-intensifies-in-europe.html?ref=world Authorities are worried that oil companies may be distorting prices. The European inquiry comes as regulators broadly look into whether traders and others are manipulating a variety of markets. Over the last year, several big banks have faced multibillion-dollar fines for their role in rigging a critical benchmark known as the London interbank offered rate, or Libor. “Regulatory scrutiny of all price-setting mechanisms has probably increased as a result of the Libor scandal, especially when some see processes like energy price reporting as subjective and prone to manipulation,”
Critics contend that the number of trades through pricing agencies like the Platts system can be sufficiently low, allowing for potential manipulation. As a result, they say that oil companies could have an impact on prices by submitting low or high bids, especially at the end of the day. “process has faced criticism because it concentrates price discovery in a small assessment time window, perhaps making it more prone to potential manipulation,”