Statoil ASA will pay $4 million to settle CFTC charges of attempting to manipulate the Argus Far East Index. According to the charges, the Norwegian energy company tried to prop up the Argus FEI by purchasing propane cargoes during the November 2011 price-setting window. Contemporaneous communications evidenced the intent to manipulate the index, such as a trader’s writing that "We are actually likely to move it quite a bit up as we keep buying" (In the Matter of Statoil ASA, November 14, 2017).
Statoil’s gas liquids unit suffered major losses throughout 2011. Anticipating seasonal demand as winter approached, the company established physical and financial positions in the Far East that would benefit from a rising Argus FEI, but the propane market conditions did not turn out as expected. To avoid losses and meet December customer obligations, Statoil purchased propane cargoes in the November price-setting window with the hope of signaling high demand and putting upwards pressure on the November Argus FEI propane price.
Statoil did not purchase more cargoes than it needed to meet its physical delivery obligations, and it did not anticipate how much supply would be available in the November 2011 Far East market. Its purchases of propane cargoes did not move the market.
The order finds that Statoil violated Section 9(a)(2) of the Commodity Exchange Act, which makes it unlawful to manipulate or attempt to manipulate market prices. Attempted manipulation requires an intent to affect market price and an overt act in furtherance of that attempt. Intent was evidenced by the communications among Statoil traders and by Statoil’s actual trading conduct. The purchases and communications also constituted overt acts in furtherance of the attempt to manipulate.
CFTC Enforcement Director James McDonald said that the case shows that the agency "will work tirelessly to root out manipulation in our markets wherever it occurs, to ensure participants in our markets have confidence they are competing on a level playing field."
This is CFTC Docket No. 18-04.
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