A rogue trader has left a London-based oil brokerage with losses of almost $10 million following a series of unauthorized trades two days ago believed to have caused a spike in global crude prices.

PVM Oil Futures issued a statement on Thursday confirming rumors that had swept through London and Asian oil markets the previous day.

"PVM can confirm that it was the victim of unauthorized trading on Tuesday 30th June," the statement said.

"As a result of a series of unauthorized 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 totaling a little under $10 million," they said.

The unauthorized trades on Tuesday are widely believed to have caused global crude oil prices to spike to their highest level in more than 8 months, in a move traders and analysts had previously struggled to explain.

PVM said it was conducting a full investigation and that it had informed the UK Financial Services Authority (FSA) and the InterContinental Exchange (ICE) where the majority of North Sea Brent crude oil futures trade.

The company did not name the person responsible for the trades.

It said in its statement: "PVM expects the highest standards of conduct from its people and takes any contraventions of those standards extremely seriously." City regulator the FSA said any investigation would likely be carried out initially by the ICE.

In May, the FSA banned a former Morgan Stanley trader who built up a hefty unauthorised oil futures position following a long liquid lunch, before hiding the deals overnight.

Oil Price Spike

London Brent crude rose as high as $73.50 a barrel on Tuesday before reversing sharply. Brent crude oil is currently trading around $66.50 a barrel.

A $2 price spike would have cost the world an extra $175 million on oil that day.

Trade sources said PVM started contacting clients on Wednesday saying it was investigating unauthorized trades by a rogue broker.

"I heard it from a PVM broker this morning. They called one of their own 'rogue' and said the broker lost money," said a Singapore-based trading source, who asked not to be named.

Trading activity in Brent crude oil surged suddenly just before 0200 GMT on Tuesday, surprising traders accustomed to very small price moves during the relatively quiet Asian hours.

More than 16 million barrels of Brent crude oil traded in the space of just over an hour, Reuters exchange data showed, unprecedented for a market that typically trades less than 1 million barrels before Europe opens.

Barrels trade in 'lots' of 1,000 barrels a time.

While the action occurred in the paper market, with no barrels of crude physically changing hands, the volume of crude traded during Asian trading was almost double the current daily output of Saudi Arabia, the world's largest oil exporter.

At the time, oil traders said the activity could have been related to end-of-quarter hedge fund positioning.

But traders noted that bidding for large volumes of crude at a time of day when there were few traders in the market appeared illogical and would have unnecessarily inflated the purchase price for the buyer, suggesting either erroneous or ill-advised activity.

PVM has a long history in the Brent market and is one of the biggest brokers, with daily turnover averaging more than 100 million barrels of over-the-counter (OTC) and oil futures, according to its website.

The group employs some 160 people worldwide, including 65 OTC brokers, 16 futures brokers, and 15 consultants.

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