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Price Manipulation In The Oil Markets?

Price Manipulation In The Oil Markets?

According to Reuters, Arcadia Petroleum Ltd, and its Parnon Energy unit have settled a $16.5 million civil suit filed against them for manipulating futures prices. This comes after a prior settlement with the US Commodities Futures Trading Commission whereby both entities were banned for trading futures for three years. Whether they admitted wrong doing is unclear but the case provides more evidence that the supposed “free” capital markets in the US are far from free.

Arcadia was accused of artificially creating a shortage at Cushing, OK, then using futures and options to manipulate prices as they spiked in the summer of 2008 before subsequently crashing, along with equity markets, in time for the fall 2008 elections. The parties involved took huge long positions to drive up prices, then dumped them for a big profit. Then they took short positions to drive prices back down.

Related: Forget The Noise: Oil Prices Won’t Crash Again

This comes on top of cases in which banks were caught manipulating LIBOR(London InterBank Offered Rate) and Foreign Exchange rates as well as theongoing probes on gold price manipulation. In all of these cases fines were issued but serious jail time, as far as we know, wasn’t.

Price manipulation is running rampant and it seems that instead of regulators issuing stiffer jail sentences to deter it, slaps on the wrist via fines are becoming more and more common. I went on record saying that the crash in oil last fall from the $70s was driven mostly by media hysteria either of their own invention or fed (no pun intended) to them by parties who stood to benefit from the fall of oil.

…click on the above link to read the rest of the article…

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