Oil price manipulation: US targets trader over ‘illegal’ oil scheme image

The U.S. futures regulator Tuesday sued two veteran oil traders and their employers, the Arcadia Energy Suisse SA and Parnon Energy Inc. firms, charging they booked $50 million in profits by manipulating oil prices in 2008.

The US Commodity Futures Trading Commission says he engineered a scam that drove up the price of West Texas intermediate crude in 2008, causing it to soar above a $US100 a barrel.

The defendants could be forced to hand over the estimated $US50 million they made in profits, and liable for a further $US150 million in penalties.

Paul Forrester, of Chicago law firm Mayer Brown, said the case would “likely turn on whether there is enough here that you can infer the causal relationship” or whether the defendants could say there were “other things going on in the market”.

Dyer said in a September 2007 e-mail to other Parnon/ Arcadia traders that there was a “s-load of money to be made shorting” the New York Mercantile Exchange West Texas Intermediate calendar spreads if the rest of the market believed supplies at Cushing were tight, but someone unexpectedly turned end-of-month balance into a “surplus,” the complaint charged.

The suit is the first anti-manipulation case filed or settled by the CFTC since April 29, 2010, according to the agency.

Neither Arcadia nor Wildgoose or Dyer were immediately available for comment.