Here’s how they might do it: if a trader at a major oil firm bought a million barrels of oil at, say, $100 a barrel, there appears to be little stopping him reporting to Platts that he actually bought the oil for $100.10 a barrel.
Then, if he’s colluded with enough of his trading competitors to deliver similarly inflated prices, Platts will, in good faith, report that oil is being bought and sold at a higher price than the one it is really being traded for.
Of course, the increase in the Platts benchmark figure will be less than 10 cents a barrel because most traders report accurate data, and an average figure is arrived at.
Still, the increase, even if it is only a few cents, could lead to massive profits if the trades are big enough.
Umm, yeah, but no, but yeah.
Where\’s the profit? What\’s the mechanism by which someone profits from doing what is described above?
No, I understand about moving futures positions etc: but he\’s not mentioned any of that. He\’s saying that misreporting leading to the benchmark rising automatically produces a profit. What?
The traders\’ books will be judged after they sell what they\’ve bought: so it will always be real market prices, not the benchmark, that determine their perceived success.
The AA has published a report claiming that speculators are using an age-old trick to make a fast buck at the expense of Britain’s 33??million motorists.
Traders working for major commodity-dealing firms are said to have been buying up vast amounts of oil with a view to making a large profit when they sell it. They do this by refusing to release the fuel onto the market and, in so doing, force a squeeze in supply. That inevitably pushes the prices up.
I think I\’d pay a little more attention to someone who was able to spot the difference between oil and fuel myself.