(Adds CFTC official’s comments)
WASHINGTON, Aug 1 (Reuters) - Marathon Petroleum Co. (MRO.N) will pay a $1 million civil penalty to settle U.S. government charges that the company tried to manipulate crude oil markets, the Commodity Futures Trading Commission said on Wednesday.
The agency said Marathon tried to manipulate the cash spot price for West Texas Intermediate (WTI) crude oil delivered at Cushing, Oklahoma, on Nov. 26, 2003, by trying to push down the Platts market assessment for spot cash WTI for that day.
The published Platts price assessment for WTI is derived from trading activity during a particular 30-minute period of the physical trading day, and is used as the price of crude oil in certain domestic and foreign transactions.
At the time of the questionable trading, Marathon priced approximately 7.3 million barrels of physical crude oil per month off the Platts price assessment for WTI.
As a net purchaser of foreign crude oil priced off of the Platts WTI price, if Marathon’s conduct was effective, the company would have benefited from a lower Platts spot cash WTI assessment, the CFTC said.
Marathon purchased New York Mercantile Exchange WTI contracts with the intention of selling physical oil during the Platts window at prices intended to influence the Platts WTI spot cash assessment downward, the agency said.
“West Texas Intermediate crude oil prices have an enormous impact on the daily lives of American citizens,” said CFTC enforcement director Gregory Mocek.
“As the guardian of the nation’s commodity markets, this case is yet another signal to the markets that we hold all companies accountable for their trading activities,” he said.