US regulators launched one of the biggest ever crackdowns on oil price manipulation yesterday, suing two well-known traders and two trading firms owned by Norwegian billionaire John Fredriksen for allegedly making $50m by squeezing markets in 2008.
The Commodity Futures Trading Commission (CFTC) said traders James Dyer of Oklahoma’s Parnon Energy, and Nick Wildgoose of Europe-based Arcadia Energy, amassed large physical positions at a key US trading hub to create the impression of tight supplies that would boost oil prices.
Later they dumped those barrels back onto the market, causing prices to crash and racking up profits from short positions they had accrued in futures markets, the suit said.
“Defendants conducted a manipulative cycle, driving the price of WTI (crude) to artificial highs and then back down, to make unlawful profits,” the lawsuit filed in New York said. The civil suit comes after three years of heightened scrutiny into oil price speculation by the CFTC, and as President Barack Obama seeks to reassure Americans he is trying to curb high US gasoline prices.