Drunk Broker "Blacks Out", Blows $500 Million On 7 Million Barrels Of Oil, Costs Passed To You At The Pump

On June the 30th 2009 oil mysteriously jumped by more than $1.60 a barrel during the night, to reach its highest price in eight months, the kind of swing that is caused by a major geopolitical event but was caused by a dead drunk broker buying 7 million barrels of crude oil with his company’s money in unauthorized trades. 

The amazing, true cause of this price spike has now been released by a Financial Services Authority investigation (FSA). 

Although not authorized to invest company cash in trades Steven Perkins, a long standing, senior broker at PVM Oil Futures, had managed to spend $520 million on oil futures contracts throughout the night, according to the FSA report. 

On the morning of the 30th an administration clerk called Mr Steven  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.”

US$1.65 is a significant movement in the price of Brent at this time of the night (other than in the circumstances of a geographical or political event, for example) as the market is usually relatively inactive during UK night time with little price fluctuation. 

Mr Perkins originated 1,921 buy trades during the First Period, which meant that in 83% of his buy trades he was the originator (out of a total of 2,318 buy trades he executed). This means that Mr Perkins as originator entered the bid price into the trading platform, he did not simply hit other people’s offers already on the screen. A large part of his trading in the First Period involved him continuously entering bids at levels higher than the prevailing best bid in the market with the direct effect of increasing the price of Brent.