LONDON: The European Commission is asking oil traders across the continent to provide evidence of market abuse to determine whether companies sought to manipulate prices reported to leading price-setting agency Platts.
Authorities last week raided the London bureau of Platts and the offices of oil majors Statoil, Royal Dutch Shell and BP in the biggest cross-border action since the probe into rigging of LIBOR benchmark interest rates. A small niche trading house in the Netherlands is also part of the probe.
At issue is whether there was collusion to distort prices of crude, refined oil products and biofuels traded during the Platts market-on-close (MOC) system - a daily half-hour "window" in which it sets prices.
The Commission has sent a dozen questions to market participants — including top trading houses Glencore and Vitol, European major Eni and Finnish refiner Neste — that refer to the 2010-2013 period and must be answered by the end of May, said two senior oil executives who requested anonymity.
"They are casting the net very wide with a set of reasonably good questions to establish how the market works," said a senior trading source.
"The biggest risk in energy markets in general is if someone is abusing its dominant position. I think this investigation comes down precisely to this."
The key question on the list, the sources say, is whether there is any proof of major discrepancies between bids and offers submitted to Platts and actual deals done in the market, trading sources said.
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.
"We still don't know what has triggered this enquiry. It's generating a lot of internal work, but we're putting things together and will respond," said a senior oil executive.
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.
Platts says trading in the oil market has not been significantly affected by the investigation.
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 "window" of trading during which the agency determines prices through a series of bids, offers and trades.
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.
Europe oil probe seeks market abuse evidence in 2010-2013
