LONDON:

Oil market officials here have launched a probe into an alleged rogue trader who helped push prices to eight-month peaks this week, costing his company nearly 10 million dollars (7.15 million euros).

ICE Futures Europe, London's oil market, is investigating Tuesday's allegedly unauthorised trade, after which crude futures surged above 73 dollars a barrel.

David Peniket, president and chief operating officer of ICE Futures Europe, on Friday said his body investigated unusual trading activity as a "matter of course."

He added: "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," said Peniket.

An oil brokerage, PVM Oil Associates, said on Friday that it was investigating suspected unauthorised trading within its company.

PVM said that it had had to unwind the series of trades, and analysts said that this had in turn contributed to a sharp drop in prices.

"The rogue oil trade on Tuesday just goes to show how easy it is to squeeze the market under thin trading conditions," said ETX Capital analyst Manoj Ladwa.

"Brent crude spiked above 73 dollars per barrel as a trader purchased the equivalent to 9.0 million barrels. The subsequent fall in price was due to PVM Oil Associates unwinding the position."

In early morning trading on Tuesday, London's Brent North Sea crude for August delivery had spiked to 73.50 dollars -- the highest level so far this year and an eight-month peak.

New York's main contract, light sweet crude for delivery in August, had soared early Tuesday to 73.38 dollars -- which was also last seen in October.

In Friday morning deals, prices stood at about 66 dollars a barrel, but losses were less severe than a day earlier when traders had sold heavily on fresh worries about the weakness of the US economy.

A statement released by PVM Oil Associates managing director Robin Bieber said late on Thursday: "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."

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

Traders use London's ICE Futures Europe market to buy and sell crude oil contracts for delivery in several months' time. This mechanism allows them to bet on whether prices will go up or down.

London's financial watchdog, the Financial Services Authority, refused to confirm or deny whether it was investigating the incident.

Analyst John Hall, who runs his own energy consultancy in Britain, said the episode illustrated how vulnerable the London oil market was to manipulation.

"The rogue trader actions highlight how susceptible this market is to manipulation, irrespective of fundamental influence," Hall told AFP.

"The market is very sensitive to manipulation in the absence of fundamentals," he added, in reference the lack of supply and demand news.