'Rogue trader' probe after oil hike

The alleged rogue trader who cost his company £6 million and pushed oil prices to an eight-month high was under investigation today.

Exchange ICE Futures Europe - where bets on the price of oil can be placed months ahead using futures contracts - is probing the flurry of trading in the early hours of Tuesday morning.

Oil broker PVM Oil Associates was forced to unwind the series of unauthorised trades.

The trades pushed the price of Brent crude futures up by more than two dollars to its highest level this year above 73 dollars a barrel.

ICE Futures Europe's president and chief operating officer David Peniket refused to comment on individual cases, but said the body would investigate unusual trading activity as a "matter of course".

"There are a range of procedures that are followed to look at trading patterns, price movement and levels of activity.

"We have a market supervision system and a compliance system and we are constantly carrying out the kind of process that we have discussed.

"It will investigate and follow up, and where appropriate, action will be taken," he said.

London-based PVM Oil Futures issued a statement after rumours spread about irregular trading on City and Asian markets.

In a statement issued by managing director Robin Bieber, the firm said it was investigating the unauthorised trades but did not name any employee suspected of being involved.

The statement said: "PVM can confirm that it was the victim of unauthorised trading on Tuesday 30th 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 dollars.

"PVM expects the highest standards of conduct from its people and takes contraventions of those standards extremely seriously."

Traders can use ICE Futures Europe, part of the Intercontinental Exchange, to buy or sell crude oil for delivery in several months' time, effectively betting on whether prices will go up or down.

During the early hours of Tuesday morning, futures contracts for 16 million barrels of oil reportedly changed hands in one hour, compared with a typical volume of 500,000 barrels.

Mr Peniket said the exchange had a "close relationship" with the Financial Services Authority (FSA) although the watchdog could not confirm or deny if it was investigating.