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SATURDAY, NOVEMBER 7, 2009
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Rogue Trader Shocks Oil Market

Crude hits highest level in a year on unauthorized trades

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(Newser) – On Tuesday, the price of oil spiked unexpectedly to its highest level in 2009—a barrel of crude jumped from $71 to $73.50 in just one hour, for no apparent reason. Yesterday the reason became clear: a rogue broker in London with PVM, the world's largest petroleum brokerage, had conducted unauthorized trades that cost the company $10 million, reports the Financial Times. Since then, the cost of oil has eased to $66.5 a barrel, down 10% from Tuesday's peak.

During that hour of trading on Tuesday, traders exchanged futures contracts for more than 16 million barrels of oil—32 times the average. The rogue trader allegedly accounted for at least half of that trading, while other brokers bought in to chase the rally. This is the second recent case of rogue trading in the petroleum market in recent weeks; in May, a Morgan Stanley broker was banned for buying and selling while drunk.

An oil pump decorated to look like a bird stands at rest in oil fields near Awali, Bahrain.
An oil pump decorated to look like a bird stands at rest in oil fields near Awali, Bahrain.   (AP Photo/Hasan Jamali)
An oil rig is seen at sunset in the desert oil field of Sakhir, Bahrain.
An oil rig is seen at sunset in the desert oil field of Sakhir, Bahrain.   (AP Photo/Hasan Jamali)
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4 comments
VIEWING:
 
Nwambe
Jul 3, 09 9:20 AM CDT
Drunk driving (up the price of gas)... I love it. Reply
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+2
Fondue
Jul 3, 09 9:46 AM CDT
I love it when people think it's all about supply and demand, and that we should just let the market play itself out. Reply
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+2
TerrifiedCitizen
Jul 3, 09 9:57 AM CDT
Everyone wants a piece of the easy pie in the sky. Reply
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0
SBS
Jul 3, 09 6:04 PM CDT
If you watch the piece on what happened they say that no one is sure about why this traded from PVM made this trade. He traded the equivalent of nine million barrels of oit, Saudi Arabia puts out about eleven million a day. One persons mistake or machination will cost all of us at the pump. Seems to easy to manipulate or make costly mistakes. Reply
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