BP denies cornering US propane market.

OIL giant BP is facing legal action over allegations that it cornered the propane market in the United States to drive up prices.

US regulators claimed that London-based BP made profits of $20m (pounds 11m) by buying up large amounts of propane in February, 2004, which saw the price skyrocket by more than 40 % to about 90 cents per gallon.

The Commodity Futures Trading Commission (CFTC) said that BP traders, with the consent of senior management, bought "enormous quantities of propane" to establish a "dominant and controlling" position in the market and then withheld supplies from the market in order to drive prices higher.

Propane gas is used by around 7m households in the US to heat trailer and rural homes and fuel cookers. It is also heavily used by many sectors of industry

Details of the alleged scheme were outlined in a civil lawsuit filed in Illinois by the CFTC against BP Products North America.

BP denied any wrongdoing, but one former BP trader, 34-year-old Dennis Abbott, of Houston, pleaded guilty in a Federal court in Washington to taking part in a conspiracy "to manipulate and corner the propane market".

Abbott, who has agreed to co-operate in a criminal investigation, faces up to five years in prison and a fine of $250,000 (pounds 138,000).

BP spokesman Ronnie Chappell said an internal investigation found that several employees had "failed to adhere to BP policies governing trading activities" and had been dismissed.