Oil Prices Were Manipulated, U.S. Government Commission Charges

The Commodity Futures Trading Commission, the agency charged with "ensuring the integrity of the futures & options market," has accused the trading firm, Optiver Holding, of manipulating the prices of crude oil, heating oil and gasoline futures on the New York Mercantile Exchange, the first complaint announced since their recent investigation into the manipulation of oil prices began:

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced today its case against Optiver Holding BV, two of its subsidiaries, and three employees, charging them with manipulation and attempted manipulation of New York Mercantile Exchange (NYMEX) Light Sweet Crude Oil, New York Harbor Heating Oil, and New York Harbor Gasoline futures contracts during March 2007.

The CFTC filed the civil enforcement action in the United States District Court for the Southern District of New York against Optiver Holding BV, a global proprietary trading fund headquartered in the Netherlands, and two subsidiaries - Optiver US, LLC (Optiver), a Chicago-based corporation, and Optiver VOF, a Dutch company. The complaint also names defendants Christopher Dowson (head trader of Optiver), Randal Meijer (head of trading and supervisor of Optiver and Optiver VOF) and Bastiaan van Kempen (Chief Executive Officer of Optiver).

In May, under the backdrop of record oil prices and calls from legislators to crack down on speculative oil trading and market manipulation, the CFTC announced a wide-ranging probe into oil price manipulation. The agency says it has dozens of investigations ongoing.

The CFTC began their probe into the manipulation of oil prices amid record prices increases in May. They say they have dozens of investigations underway. This was the first announced charge against a specific company. The implication is that there are more to follow.

According to the complaint, the defendants employed a manipulative scheme commonly known as "banging" or "marking"' the close. "Banging the close" refers to the practice of acquiring a substantial position leading up to the closing period, followed by offsetting the position before the end of the close of trading for the purpose of attempting to manipulate prices.

Additional information will be forthcoming as the investigation continues.

More on this topic at THE ENVIRONMENTALIST

Comments

[Snoop2]

Dear Janet, although you have most of the stor y correct, you have missed the main issue.
Although the CFTC found Optiver was manipulating oil prices, the profit they made was only (1) one million dollars,and this instance happened a year ago or more. The impact on the overall market was miniscule. So once again the feds will put some low level commodities trader in jail instead of going after the big fish that grease their palms and fund their political campaigns. This is like putting Martha Stewart away for insider trading. Are these two examples, Optiver and Martha the best the feds can come up with. With a farce!

[research]

but the GOP won't allow regulation:

http://online.wsj.com/article/SB121702679230086263.html?mod=googlenews_wsj

GOP = robber barons.

[NL207]

This idiocy is in direct contradiction with every blog on this site that quotes 'peak oil' theory. That says that demand has grown beyond the 86 million bbls a day the world's oil companies are able to produce and moreover, the oil resources of the planet are approaching exhaustion, therefore per deim oil production must begin to fall, which will drive prices even higher. Market manipulation has nothing to do with it.

[MickO]

The theory of "peak oil" has been debunked. Heard of Lindsey Williams? Check YouTube and hear his explanations. Though he comes off as a crackpot in some aspects, he gives a lot of insight into the oil industry. My problem is this... what choice do we have? My cars run on gasoline. Seems like we should be bringing down the price of oil instead of bashing the oil industry.

Check out www.fedupnetwork.com and see what we can do.

[KillTheMessenger]

Really? By someone you call a crackpot yourself? And it's on YouTube? Then it must be true, I guess. I mean everything on the internet is true and if it's on YouTube it's doubletrue.

:-)

[hark]

Peak oil theory has NOT been debunked. The only question is when it will occur, or whether it already has. There is a finite supply of oil. It is not renewable. How much is recoverable, and at what cost is not known. But under the most optimistic assumptions, peak oil will occur this century, probably before 2050, and possibly much sooner. In addition, there is no way the world can consume oil to the extent that we do. Picture a world fifty years from now, where everyone has attained the standard of living of a typical American in the year 2000, and you have a world using oil at 450 million barrels a day. That is impossible. The oil would run out in a very short time at that rate. Which means we're heading toward a brick wall. We have got to develop alternatives, and we have to start now. And this is true regardless of the state of global warming.

This is not a partisan issue. Countries like China and India want to live the way we do, or the other advanced countries (who actually live better than we do), and that is impossible with oil as the source of energy. So again, there's a brick wall ahead, a big battle looming for the last drops of oil if we don't do something now.

[DeSwiss]

Banging, indeed.

However, we have always been "banged" by the rich and powerful.

One way or another...

:-|