Rogue Trader Sends Oil to Year-High on $10m Gamble
Susan Thompson and Miles Costello
PVM Oil Futures, a London-based division of the world’s biggest broker of over-the-counter derivatives, has lost almost $10 million (£6 million) after falling foul of a rogue trader.
The unauthorised trades in the early hours of Tuesday morning are reported to have been brokered by Steve Perkins, a senior, long-standing trader in futures on the Brent oil
More..contract. He is understood to have been suspended from his post.
A spokesman for PVM Oil refused to confirm the identity of the trader and said the company had launched an investigation and continued to operate normally.
The rogue trades are widely believed to have caused global crude oil prices to spike to their highest level in more than eight months – a leap that traders and analysts had struggled to explain.
Oil breached $73 a barrel during Asian trade on Tuesday, up by more than $1.50 a barrel in under half an hour at around 2am.
More than 16 million barrels of Brent crude oil traded in just over half an hour, according to Reuters exchange data, an unprecedented amount for a market that typically trades less than one million barrels before Europe opens.
The volume of crude traded during Asian trading was almost double the current daily output of Saudi Arabia, the world’s largest oil exporter.
It is not known whether the dealing was deliberate or a mistake but PVM said that it had alerted regulators at the Financial Services Authority (FSA), the City watchdog, and the ICE oil exchange, the marketplace for Brent.
ICE declined to comment beyond saying its surveillance team would investigate any unusual trading patterns. The FSA refused to comment.
PVM, which operates from offices in London's West End, confirmed that it had discovered that it was sitting on "substantial volumes" of unauthorised oil futures contracts.
It said: "PVM Oil Futures Ltd can confirm that it was the victim of unauthorised trading on Tuesday, June 30.
"As a result of a series of unauthorised trades, substantial volumes of futures contracts were held by PVM. When this was discovered, the positions were closed in an orderly fashion. PVM suffered a loss totalling a little under $10 million," PVM said.
PVM Oil Associates reported net profit of $5.88 million in the year ending July 31, 2008, according to statements seen by Bloomberg. PVM Oil Futures recorded a net profit of about $1 million in the same period.
PVM is a private company owned by its employees with offices in Vienna, Singapore, New Jersey and Houston.
In May, a former commodities trader at Morgan Stanley in London, who shorted oil futures without permission after an alcohol-fuelled lunch, was banned by the FSA for trying to conceal his trades.
<a href="http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6628545.ece" target="_blank">Rogue Trader Causes Oil Price to Spike</a> Less..
Added: Jul 3 2009 In: news_politics
Recorded on: Jun 29 2009
By: True_Madness 
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Comments - sort by newest to oldest
fk futures traders. hang em high I say
Posted Jul-3-2009 by "dan_man_" (B)
It looks good on them. I'm sick of them, and others, manipulating commodities to inflate their values.
Posted Jul-3-2009 by "Captain Canuck" (R)
second that emotion.
now back to work on my invention- a car that runs on cat puke....
Posted Jul-3-2009 by "lucius72" (R)
Another day... Another thieving douchebag... Another bubble... Another crash...
Until governments start treating this kind of shit as a crime on par with bank robbery, then it's not going to stop. These rogue brokers need to be sent to prison for a long time and the stories of their subsequent gang rape must be circulated far and wide in the financial community. This shit has got to stop. These greedy ****ers need to have the fear of God put into them. Even if it means killing some of them.
Posted Jul-3-2009 by "AvgDude2" (R)
more money hungry pukes at it again.
Posted Jul-3-2009 by "brako" (R)
it's not so much supply and demand driving prices as it's greedy traders and production companies.
Posted Jul-3-2009 by "Amusing" (R)