BP Accused of Price Manipulation

Elena
29 Jun, 2006
New York City

The Commodity Futures Trading Commission said that BP traders, having the consent of senior management,

[R]8:00AM BP traders allegedly manipulated propane prices.[/R]
Allegations by Federal investigators that BP traders illegally manipulated propane prices in 2004 threaten to hurt the oil and gas industry''s image. BP PLC and other major oil companies testified before Congress, emphasizing in interviews that recent soaring prices for gasoline and other fuels resulted from market forces beyond their control.

The Commodity Futures Trading Commission said that BP traders, having the consent of senior management, ‘purchased enormous quantities of propane to establish a dominant’ position in the market and then withheld fuel in order to drive prices higher. Details of the alleged scheme, as well as internal company documents and recorded conversations, were outlined in a civil lawsuit the CFTC filed against BP Products North America Inc.

BP denied any wrongdoing, but a former employee admitted taking part in a conspiracy and agreed to cooperate with criminal prosecutors. Apart from potential criminal charges, each defendant could be fined as much as $120,000.


[R]7:15 AM Asian markets gain on the back of U.S. advances.[/R]
Asian markets closed higher on Thursday. Japan''s Nikkei 225 index gained 1.58% to finish at 15121.15. The oil sector emulated the gains of its U.S. counterparts. Refiner Nippon Oil soared 5%, supported by low valuations and an announcement Wednesday that it would hike wholesale prices. Other gainers included TDK, which advanced 2.37% and Olympus, which gained 3.09%. In Hong Kong, the benchmark Hang Seng Index gained slightly 0.78% to end at 15865.22. South Korean shares gained for the third session in four, with the Kospi advancing 2% to close at 1263.02. Samsung Electronics advanced 1.7%. Kookmin Bank added 2.9% and Hyundai Motor climbed 1.9%. Korea Exchange Bank put up 3.3%, in spite of the news that prosecutors raided its Seoul headquarters in connection with the investigation into Lone Star''s purchase of a controlling stake in the bank in 2003. Elsewhere in the region, the Weighted Price Index of the Taiwan Stock Exchange edged up 1%, to 6607.39 and Sydney''s S&P/ASX200 index also finished 1% higher at 4997.2.

[R]6:30 AM European stocks rally, led by oil and banks shares.[/R]
European markets traded higher by mid-morning. The U.K. FTSE 100 index increased 0.7% at 5,719, the German DAX Xetra 30 index gained 0.8% at 5,501 and the French CAC-40 index advanced 0.8% at 4,812. On the corporate front, energy and financial stocks led the gainers, with oil companies benefiting from stable crude prices near recent highs of $72 a barrel. Norway’s Statoil gained 2.6%, while Repsol of Spain added 1.1% and Finnish refiner Neste Oil climbed 2.9%. Britain’s BP advanced 1.5% despite facing pressure from the US futures trading regulator, which lodged a complaint to a district court in Illinois alleging propane price manipulation. Financial sector advances came in spite of increasing expectations that the European Central Bank will continue hiking eurozone interest rates, cooling credit demand. But as markets advanced, so did French insurer Axa by 2.1%, Zurich Financial by 1.8% and Dutch life insurer Aegon by 2.5%.

The August oil contract finished 27 cents higher at $72.19 a barrel, while gold bullion opened Thursday at a bid price of $581.20 a troy ounce, up from $579.95 late Wednesday. The dollar edged down against the European currency. The euro purchased $1.2543 in morning European trading, compared with $1.2550 in New York late Wednesday. The British pound slipped to $1.8163 from $1.8185. The dollar was slightly higher against the Japanese currency, inching up to 116.51 yen from 116.40 yen.