Oil prices in the drink

Sharp fluctuations in global oil prices are usually the result of major geopolitical events. A recent investigation by the UK’s Financial Services Authority (FSA) suggests other unexpected factors can also move the markets significantly. Investigating a more than $1.50-a-barrel overnight spike on June 30, 2009, the FSA discovered that this eight-month high was the result of a drunken binge by a broker, one Steve Perkins. According to oilprice.com, an online energy news site, “On the morning of the 30th an admin clerk called Mr Perkins to ask why he had bought 7 million barrels of crude during the night. Mr Perkins had no recollection of the transactions, and it turned out that he had made the trades during a ‘drunken blackout’. By the time PVM had realised the transactions had not been authorised by a client, they had incurred losses of $9,763,252.” Mr Perkins’ licence has been withdrawn for five years and he was fined £72,000. Considering he had bought up 69 per cent of global market in about two hours, the FSA’s comment – “Mr Perkins poses an extreme risk to the market when drunk” – can considered a very British understatement.