NYMEX traders allege big firms manipulated Brent oil prices

LONDON (Reuters) - Four NYMEX traders have alleged that the North Sea Brent crude oil market has been manipulated by oil majors and trading houses since at least 2002, in a class action they brought in the wake of a wide ranging European Commission inquiry.

A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor

Royal Dutch Shell, BP, Statoil, Morgan Stanley, Trafigura Beheer, Trafigura, Phibro Trading and Vitol are named as defendants in the lawsuit filed in a Manhattan court in October.

In the filing, the plaintiffs allege that traders at these companies combined to manipulate Brent crude oil prices and Brent futures contracts traded on NYMEX, citing periods in February 2011 and September 2012.

Morgan Stanley, Trafigura, BP, Shell and Vitol declined to comment. A Statoil spokesman said it was not uncommon to see private U.S. lawsuits filed following investigations by government agencies. A spokesman for Phibro said the firm had not been a target of or involved in the European inquiry, nor had it been served with the lawsuit.

“Any claims that Phibro was involved in the activities being investigated by the commission are totally without merit and Phibro will vigorously defend itself,” he said.

In May, the European Commission launched an inquiry into suspected anti-competitive agreements relating to the submission of prices to Platts, a unit of McGraw Hill, which operates an energy information and global price reporting service.

Shortly after this, Chicago-based commodities trading firm Prime International Trading Ltd filed a lawsuit against BP, Shell and Statoil, alleging collusion to fix oil prices. The companies did not respond at the time to requests for comment.

The European Commission’s inquiry has yet to reach any conclusions.

Platts said on Wednesday it was cooperating fully with the European Commission’s review and had not been charged with any wrong-doing.

Brent is a global benchmark for two-thirds of the world’s internationally-traded crude oil supplies. It is underpinned by four physical crude streams - Brent itself, Forties, Ekofisk and Oseberg.

Physical volumes have dwindled in recent years, but the futures contract is widely traded.

The plaintiffs in the October class action - which include Kevin McDonnell, who was a director of NYMEX Holdings, and other traders working at NYMEX at the time - allege that the defendants reported false and misleading data for transactions to Platts during its price assessment window.

The window, or market-on-close (MOC) system, is a daily half-hour period in which Platts determines cash prices through a series of bids, offers and trades.

Asked for comment a spokeswoman at Platts said: “Platts has not been named as a defendant in this lawsuit.”

The suit alleges that as major market participants, the defendants have the power to push prices in a particular direction, undermining the entire pricing structure for the Brent physical and futures markets.

Specifically, the suit claims that in February 2011 and September 2012 the defendants engaged in disruptive and manipulative trading during the Platts window “at least in part to benefit their Brent crude oil derivatives positions”.

Thomson Reuters, parent of Reuters news, competes with Platts in providing news and information to the oil market.

Reporting by Claire Milhench; additional reporting by Alex Lawler and Jonathan Leff in New York; Editing by Anthony Barker and Andrew Hay