“The European Union says it is searching for evidence that oil traders manipulate prices. If oil trader Halis Bektas is correct, it shouldn’t be hard to find.

“Mr. Bektas describes one strategy he has used himself: Offer to sell a small amount at a loss to drive down published oil prices, then snap up shiploads at the lower price.

“He says such a trading strategy works this way: He might be scheduled to buy perhaps 80,000 metric tons of fuel oil, its price pegged to the daily benchmark published by Platts, a division of McGraw Hill Financial Inc. In the days before the purchase, he could offer to sell smaller quantities at discount prices—sometimes $3 to $5 a metric ton below market rate—and report those offer prices to Platts.

“Key to the strategy is a peculiar aspect of the spot market for oil, where traders buy and sell bargeloads for immediate delivery. Deals are negotiated in private, and buyers and sellers aren’t required to disclose prices to anyone. To come up with a benchmark price, Platts has to rely on information volunteered by traders—a far cry from the way stocks or even oil futures are priced by crunching comprehensive data from public exchanges.”

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