US probes BP for gas market manipulation
US regulators may file charges against BP related to alleged manipulation of the gas market in 2008, the latest investigation into the oil majors trading activities.
February 03, 2011 / 09:20 IST
US regulators may file charges against BP related to alleged manipulation of the gas market in 2008, the latest investigation into the oil majors trading activities.
BP was previously fined by the US Department of Justice for price fixing in the propane market in 2004 and by the New York Mercantile Exchange 2003 for crude trades.The investigation comes as BP struggles to improve its image in the United States following the spill in the US Gulf of Mexico last year.The trading activity in question occurred in October and November 2008, during a period when US gas prices tumbled from near record highs that summer as production increases and recession fears took the bottom out of the US natural gas market."The US Federal Energy Regulatory Commission (FERC) and the US Commodity Futures Trading Commission (CFTC) are currently investigating several BP entities regarding trading in the next-day natural gas market at Houston Ship Channel during October and November 2008," BP said in its fourth-quarter 2010 earnings report.The company said the CFTC notified BP that it planned to recommend alleging market manipulation. The CFTC and FERC declined to give details on the investigation.Gas prices at the Houston Ship Channel fell from USD 6.69 per million British thermal units at the beginning of October 2008 to USD 5.90 at the end of November, mirroring price action at the key Henry Hub delivery point in Louisiana.BP's trading desk, once considered the biggest and best in the world, has been dramatically scaled back since former CEO John Browne stepped down in 2007.Market sources were unclear about the details of trading activity at that time.BP was fined USD 373 million by US Department of Justice, including USD 50 million for Texas refinery explosion and USD 303 million for price-fixing in the propane (LPG) market in 2004.In 2003, the New York Mercantile Exchange fined BP USD 2.5 million for crude oil trades in 2001 and 2002 after allegations including wash trading, and conduct detrimental to the interests and welfare of the exchange. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
