Business | Oil & Gas
Rogue oil trader caused British firm to lose $1om
A London-based oil broker is under investigation after a rogue trader caused the firm to lose $10 million (Dh36.7m) following a series of unauthorised trades that were believed to have caused a spike in global crude prices.
- The Guardian News & Media Ltd
- Published: 23:51 July 3, 2009
London: A London-based oil broker is under investigation after a rogue trader caused the firm to lose $10 million (Dh36.7m) following a series of unauthorised trades that were believed to have caused a spike in global crude prices.
The company named the person responsible for the trades as Steve Perkins, a senior broker based at the firm's London office.
The trader left the firm on Tuesday following the discovery of contracts that helped push trading volumes to almost double the current daily output of Saudi Arabia, the world's largest oil exporter.
PVM Oil Futures confirmed that it was forced to pay $10 million to honour unauthorised trades by the broker, who for legal reasons could not be named.
It said: "PVM can confirm that it was the victim of unauthorised trading on Tuesday, 30 June.
"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."
Oil is the most heavily traded commodity, with main centres in London and New York. The price is set by futures contracts placed in London's InterContinental Exchange (ICE), which dominates European trading, and New York's Nymex.
According to some analysts, as much as 60 per cent of crude oil prices are based on speculative trading by firms such as PVM, which place orders on behalf of large trader banks and hedge funds.
Tuesday's unauthorised trades are widely believed to have caused global crude oil prices to spike to their highest level in more than eight months.
PVM said it was conducting a full investigation and had informed the Financial Services Authority (FSA), and the InterContinental Exchange (ICE), where the majority of North Sea Brent crude oil futures trade.
"PVM expects the highest standards of conduct from its people, and takes any contraventions of those standards extremely seriously," the statement said.
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