By Christian Berthelsen And Sarah Kent 

A U.S. regulatory judge ruled BP PLC manipulated the Texas natural gas market in 2008 and said fines against the British energy company could increase because the scheme took place after earlier market manipulation.

The ruling by Carmen A. Cintron, an administrative law judge for the U.S. Federal Energy Regulatory Commission, found BP flooded a Texas delivery point with natural gas to drive down prices there in the physical market, while at the same time placing trades in related financial markets that would benefit from the reduced price.

BP said Thursday it disagreed with the judge's conclusions and would appeal the decision to the full FERC commission. "BP is committed to adhering to the highest ethical standards," the company said. It had maintained in case filings and an earlier hearing that the trading wasn't improper and that FERC's analysis of the evidence was flawed. A FERC spokeswoman declined to comment.

The ruling is the latest sign of increasing oversight of physical and financial commodities markets in the wake of the 2008 financial crisis and such scandals as the 2001 collapse of Enron. Traders like BP, one of the biggest oil and gas merchants in the world, are preparing for a raft of new regulations in Europe, while tightening scrutiny in the U.S. has driven a number of banks out of the physical commodities trading business altogether. FERC has proved to be a particularly aggressive market watchdog, pursuing high-profile cases against J.P. Morgan Chase & Co., Barclays PLC and Deutsche Bank in recent years.

Enforcement lawyers from FERC have sought fines in the BP case of nearly $50 million, even as the government's own evidence showed the activity netted the company less than $250,000 in profits.

The case is the latest black eye for BP as it struggles to rehabilitate its reputation in the wake of its fatal oil-platform blowout in the Gulf of Mexico five years ago. The company reached a landmark $18.7 billion settlement last month resolving federal and state claims related to the subsequent spill. This gas-market ruling will also add to pressure on the company as it tries to right itself amid a dramatic slump in oil prices.

The conduct in the gas market occurred just a year after BP settled a case with the U.S. Justice Department and the U.S. Commodity Futures Trading Commission, paying $303 million to resolve charges that it manipulated the propane market.

In that case, the company also agreed to a permanent injunction barring it from further manipulative activity and submitted to an independent monitor over its trading. In her ruling, Judge Cintron said BP could face increased penalties because the conduct occurred less than five years after the propane case was settled.

The case was kicked off after junior BP trader Clayton Luskie phoned senior BP trader Gradyn Comfort on a recorded line and asked how to describe their market strategy in a way that didn't "make it sound like we're manipulating" the gas market. BP turned over the tape to the monitor and regulators, even as it maintained Mr. Luskie had misspoken.

But FERC maintained trading records and market data showed BP did increase money-losing sales of physical gas at the Houston Ship Channel while increasing financial bets that price gaps between there and the benchmark Henry Hub would widen.

The amount of the fine being imposed on BP wasn't decided by Judge Cintron. The full FERC commission will decide on a penalty amount after reviewing the judge's conclusions. Judge Cintron also concluded BP's internal investigation of the matter was "ineffective and biased," which could further enhance penalties because BP was required to have a strong compliance program as part of the propane settlement.

Write to Christian Berthelsen at christian.berthelsen@wsj.com and Sarah Kent at sarah.kent@wsj.com

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