London-based oil brokerage PVM Oil Associates is understood to have parted company with one of its senior long-standing derivatives brokers after allegedly detecting a large unauthorised Brent ICE position on his book.
While the oil market in London was abuzz with the story on Thursday, hard details were still thin on the ground. However, the wayward trade is thought to have involved anywhere between 1,800 and 9,000 lots of Brent ICE futures, which at the top end would be equal to as much as $630m or 9m barrels of oil.
To put that in context, the world’s top exporter Saudi Arabia has the ability to produce some 11m barrels a day at maximum capacity.
The huge position is said to have been amassed in the early hours of Tuesday morning, around 2am. Sources said PVM, the world’s biggest independent oil broker, began to unwind the position as soon as it was detected when the firm formally opened for business on Tuesday, minimising losses to the privately-owned company to around $10m.
One source said the trader involved promptly resigned, although neither PVM managing director David Hufton nor any of his colleagues returned calls on the matter.
Oil hit an eight-month high during Asian trade on Tuesday, breaching $73 per barrel before stumbling back below $70 over the course of European trade.
The company is understood to have informed the FSA.
More news as we get it…
Here’s the price movement on the day via Reuters:
