Mayur Pahilajani - AHN News Writer
New York, NY (AHN) - A rogue oil trader is being charged for spiking futures prices earlier this week and costing London-based oil brokerage firm PVM Oil Futures Ltd. around $10 million (6 million pounds) after making unauthorized trades, despite increased scrutiny from regulators globally.
The reports said Friday that the trade brokered by Steve Perkins may have led to a surge in oil rates by as much as $2 a barrel on June 30, lifting crude to eight-month high level of $73.50 a barrel.
Perkins is a senior and long-standing trader in futures on the Brent oil contract.
PVM -- a unit of the world's biggest broker of over-the-counter oil derivatives, PVM Oil Associates Ltd. -- said that it is investigating the price jump and "unusually high" trading volumes.
"As a result of a series of unauthorized trades, substantial volumes of futures contracts were held by PVM," The New York Times quoted Robin Bieber, director of PVM Oil Futures, as saying in a statement.
He added, "When this was discovered, the positions were closed in an orderly fashion. PVM suffered a loss totaling a little under $10 million."
Bieber said in the statement the firm has informed its regulators, the Financial Services Authority of Britain and the ICE Futures Europe exchange, of the incident.
"That price movement had all the finger prints of someone getting caught in the market," Stephen Schork, president of the Schork Group in Villanova, Pennsylvania, told Bloomberg News.
On Tuesday, oil prices breached $73 per barrel during Asian trading session, within 30 minutes at around 2:00am GMT.
The reports said that over 16 million barrels of Brent crude oil traded within two hours from that time, which is almost doubled the current output of the world's largest oil exporter, Saudi Arabia, according to Times Online.
"Commodities trading, together with futures and options, is under quite a lot of scrutiny," FSA spokeswoman Abi Jones told Bloomberg, without commending on "possible investigation."
Jones added, "We would expect the regulated exchanges, including ICE, to have adequate systems and controls" against possible rogue trading.
Trading from PVM's London office, Perkins reportedly bought up to 10 million barrels of ICE Brent crude futures early Tuesday.
PVM Oil Futures reported a net profit of around $1 million in the year ending July 31, 2008, while PVM Oil Associates posted net earnings of $5.88 million with revenues from commissions and other income of $65.2 million.
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