What actually is the Oil market? How does it work? Who should look at it? (Part 3)
Oil Pricing (Platts window)
Good morning Folks,
One of the reasons why I hesitated to write about the platts window is because of the complexity and well… it’s an ugly truth. But I thought it is important enough for you guys to know about it. Now, I will try to simplify this as much as I can, so do feel free to drop me comments or questions if you have any after reading it.
We will cover Platts window (aka “window”) as follows:
What is the Platts window?
How does it work?
How do traders game the system?
Case study
1. What is the Platts window?
The Platts Window, often called the "Market on Close" (MOC) Window, is a critical pricing mechanism used in oil and commodity markets, particularly by S&P Global Platts (formerly known as just Platts), which is a leading provider of energy and commodities information.
The Platts Window is a specific period of time—usually the last 30 minutes of the trading day—during which Platts assesses and publishes benchmark prices for physical oil and other commodities. It is a price discovery process based on real bids, offers, and transactions submitted by market participants. In Singapore, its 1600 to 1630 SG time. In London, its 1600 to 1630 Ldn time. In US, its 1400 to 1430 Eastern time. That means prices tend to be extra volatile during these “30 mins” block, especially at 1630 SG/UK time and 1430 ET respectively.
Now, why does it even matter to a retailer? The window MOC sets the global oil price benchmarks such as Dated brent, Dubai, FOB Singapore refined products etc. The physical contracts can be up to billions of dollar that pegs the price onto these benchmarks. While this system is suppose to be open and transparent, countering opaque bilateral deals, it can be subject to heavy manipulation. You’ll see why below.
2. How does it work?
Step-by-Step: How the Platts Window Works
1. Before the Window: Set the Stage
Market participants (oil traders, refiners, producers, etc.) prepare to submit bids, offers, and trades.
These submissions are made via Platts eWindow, a specialized online platform.
Participants know what time the window opens and closes (eg. 16:00 to 16:30 London time for crude oil).
2. During the Window: Live Market on Close (MOC) Process
From 16:00 to 16:30 (for crude, but varies by product):
Traders enter:
Bids: "I want to buy 100,000 barrels of North Sea Forties crude at Dated Brent + $0.20."
Offers: "I will sell at Dated Brent + $0.30."
Trades: If a bid and offer match, they can execute a deal.
All submissions must follow Platts-defined standards (like loading dates, volume, delivery terms, quality).
Visibility:
Everyone in the market can see the bids/offers in real time on eWindow.
Platts editors observe, verify, and record every valid submission and transaction.
3. At the Close: Pricing Judgement
At 16:30 sharp, Platts freezes the activity and starts their editorial assessment.
They analyze:
The most competitive bids and offers at the close.
Any actual trades done near the close.
Market consistency, outliers, and unusual behavior.
Based on this, they determine the daily price assessment — often the midpoint of the best bid and offer, or last trade, depending on liquidity and consistency.
4. Publication: Final Price Becomes Benchmark
The assessed price is published shortly after the close.
This price becomes the daily benchmark for that commodity (e.g., Dated Brent, Singapore gasoil, etc.).
Companies use it for:
Physical oil contracts
Hedging and derivatives
Financial reporting and taxation
Example in Action:
Let’s say you’re watching the Dated Brent MOC:
Shell submits a bid: “I’ll buy Forties crude at Dated Brent + $0.10.”
Vitol offers the same crude at Dated Brent + $0.25.
If no one hits or lifts the other side, Platts may assess Dated Brent + $0.175 (the midpoint).
If someone buys at +$0.20 near the close, that may become the assessed price.
Editorial Role:
While the process is designed to be transparent and rules-based, Platts editors use discretion to:
Reject suspicious trades (e.g., collusion or wash trades).
Adjust for anomalies or poor liquidity.
Ensure the final assessment reflects a fair market value.
3. How do traders game the system?
By now, you should have a rough idea on how oil is priced. Yes, the final MOC price at 1630 sets the price for billions of dollars of oil in the world. Therefore, traders will influence prices as much as they can, down to even the cents.
Here are some ways traders can affect prices.
1. Bidding or Offering to Move the Price (Price Signaling)
Aggressive Bidding
A trader wants the benchmark (e.g., Dated Brent) to go up.
They submit high bids late in the window without necessarily wanting to buy — just to pull the benchmark higher.
Even if no trade happens, the bid itself influences Platts' price assessment.
Lowball Offers
Conversely, a trader might want the benchmark to drop (maybe they’re short).
They throw in cheap offers near the close to pull down the assessment.
These tactics are especially effective in illiquid windows where a single bid or offer can dominate.
2. Painting the Tape (Optical Liquidity)
A trader might submit fake-looking liquidity — lots of bids/offers that create the illusion of strong demand or supply.
Example: Greatcore puts in multiple bids for 600k barrels of crude at Dated Brent + $0.20. Looks bullish — but no intention to execute.
This can move market perception, affect rival behavior, or shape the benchmark, even if nothing trades.
3. Trading Small Volume to Anchor Price
Traders sometimes execute a small trade near the close at a strategic level — just enough to anchor the price where they want it.
Platts may give more weight to a real trade vs just bids/offers, so this tactic can be decisive.
Even a one-cargo trade (like 600k barrels) can impact millions in derivatives linked to the benchmark.
4. Ramping / Spoofing (High-Risk, Regulated Tactics)
Some aggressive traders used to:
Submit a flurry of fake orders (spoofing).
Cancel them before execution.
Or ramp prices with colluding trades.
These are now under tight regulatory scrutiny. Traders found doing this have faced fines, bans, or worse.
5. Protecting a Derivatives Position
Let’s say Shelly holds a long Brent futures position.
If they can push up Dated Brent in the window, they:
Increase the futures settlement price (since Brent futures are often pegged to Platts benchmarks).
Profit massively, even if they lose money on the physical play.
This is why physical cargo trades can be worth the effort — they control the index behind billions in paper.
Example Scenario
Imagine a trader at Trumpgura:
Has 10 million barrels of North Sea crude arriving next month.
Knows buyers will pay “Dated Brent + premium”.
If they can push up Dated Brent by just $0.20, they earn $2 million more on those deals.
So they:
Aggressively bid near close in the Platts window.
Maybe execute a single cargo at the higher level.
Benchmark moves up — mission accomplished.
Yes, it sounds like this commodity is lawless. Fortunately, there are controls. Platts and regulators watch for things like uncommercial bids/offers, wash trades (buying from yourself), collusion and last-second gamesmanship. They can reject trades, exclude certain players from the window and even hand info to regulators.
4. Case Study
So, now you know the game. There are rules as well as loopholes, and it takes “skill” to game the system. That’s why top traders are paid astronomical bonuses. Yes, the highest i heard of crosses into nine figures. Let’s take a look at a real life example of the window game we talk about.
Case Study: Forties Cargoes and the Dated Brent Benchmark
Timeframe: This kind of activity has occurred many times, but one of the best-documented examples happened around 2018, involving major trading houses (including Greatcore, Trumpgura, and Victory).
Context First: How Dated Brent Works
Dated Brent is a physical crude oil benchmark based on offers and trades of five North Sea grades:
Brent, Forties, Oseberg, Ekofisk, and Troll (often shortened to BFOET).
If a Forties cargo is offered during the Platts MOC, and it's the most competitive (cheapest) offer, it can set the Dated Brent price.
So even though Dated Brent sounds like one thing, a single cargo of Forties crude can control it.
The Strategy: "Dump a Forties Cargo to Drag the Benchmark"
A trader (let's say Greatcore) holds a lot of Brent futures contracts or is buying physical barrels at “Dated Brent minus $X.”
They decide to offer a Forties cargo cheap — say, at Dated Brent - $0.50 — during the Platts window.
That low offer sets the Dated Brent benchmark for the day, pulling it lower.
Because their physical cargo deals or paper positions are tied to Dated Brent, they profit from the lower benchmark.
Even though they’re losing a little money on the cheap Forties sale, they can make millions on the derivative side or on volume-based deals priced off the new Dated Brent.
Example in Numbers
Let’s simplify:
Greatcore offers a Forties cargo at $72.50, pulling Dated Brent down to that level.
They have physical contracts for 5 million barrels priced at Dated Brent - $0.20.
With Dated Brent now $0.50 lower than it would've been, their total purchase price drops by:
$0.50 x 5 million barrels = $2.5 million in savings.
They may have sacrificed $200k on that single Forties cargo, but profited millions elsewhere.
This boils down to the question once again. Is this legal? Well, technically, yes. It’s called “price shaping,” and as long as the offer is real, Platts will accept it. Because the window is a transparent place where willing buyers and sellers come to set the market price, the “opponent” of greatcore can do the opposite or “defend” the benchmark. However, when traders consistently dump Forties cargoes to move the benchmark, regulators do get suspicious.
Throughout the years, Platts has adjusted its methodology to reduce this type of distortion (like incorporating more cargo grades, adjusting timing, and increasing transparency). But let’s just say that there will never be a perfect rule. Loopholes will always exist. In the thinly traded, high-stakes world of physical oil, just one cargo offered smartly can sway a global benchmark. That’s why trading houses invest in both physical infrastructure and trading talent — because controlling the benchmark means controlling the market.
And that’s why retailers who have no access to the window often bear the brunt of the big boys. If you think this only exists in Oil, think again. It exists in ALL tradable classes. The only way to game this system, is to read the tape and join the big boys via order flow.
That’s all I have for today. Have a great week ahead. Do hit the like button.
That must have taken a lot of effort. Great read and appreciated
Excellent explaination, thanks for this!