Oil brokerage says it lost $10m on rogue trades

Associated Press / July 4, 2009
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LONDON - PVM Oil Associates, the world’s biggest over-the-counter oil brokerage, says it lost nearly $10 million this week because of unauthorized trades that caused a temporary spike in Brent crude markets.

PVM said in a statement late Thursday that it was investigating the trades, which drove up the price of Brent futures by more than $2 in one hour early Tuesday London time.

It did not identify the trader involved in the transactions.

ICE Futures Europe, the exchange that handled the trades, said yesterday that such incidents would be investigated as a matter of course, but declined to comment specifically on this case.

The Financial Times reported that futures contracts for 16 million barrels of oil changed hands in one hour, compared to a typical volume of 500,000 barrels.

PVM said the trading had been reported to the Financial Services Authority, but the government agency declined to say yesterday whether it was investigating.