Rogue Broker Spikes Oil Prices. Proof Speculators Need Regulating in Commodities Markets

The Financial Times layed it out very simply:

The startling spike in oil prices to their highest level this year on Tuesday was caused by a rogue broker who placed a massive bet in the Brent oil market, triggering almost $10m of losses for his company. PVM Oil Associates, the world’s largest over-the-counter oil brokerage, said on Thursday it had been the “victim of unauthorised trading”.

Traders said the broker implicated had allegedly accounted for at least half of the
unusual activity, with the rest the result of others chasing the rally. The incidents come as regulators are considering tougher oversight of the commodities markets after policymakers complained that speculators fuelled last year’s surge in oil and agriculture prices.

The involvement of PVM is ironic considering the company’s head, David Hufton, has been an outspoken critic of speculators in the oil market, calling some of the exchanges “electronic oil casinos”. In 2006, he said that “if futures exchanges did not exist, oil prices would be a lot lower”.

I’m hoping my conservative friend will read this and back off his claim these guys are just doing their job and making a lot of money.

Yea, at ours and the countries expense.