David Peniket, president and chief operating officer of ICE Futures Europe, yesterday 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.
Oil broker PVM Oil Associates, victim of the anauthorised trades, yesterday said senior trader Steve Perkins had been behind the activity. PVM was forced to unwind the series of unauthorised trades - a move that in turn contributed to a sharp drop in prices, analysts said.
"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 US$73 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 trade on Tuesday, London's Brent North Sea crude for August delivery had spiked to US$73.50 - 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 on early Tuesday to US$73.38 - which was also last seen in October.
In morning deals yesterday, prices stood at about US$66 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 by PVM managing director Robin Bieber late Thurs-day said: "PVM can confirm that it was the victim of unauthorised trading on Tuesday. "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 US$10 million. "
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.