Global giant BP and trading house Phibro joined the list of market titans wrong-footed by last quarter's oil volatility, while Deutsche Bank emerged with record commodity earnings.

BP, which has revamped and reduced its once-dominant trading arm, said the division posted its second loss of the past three quarters, contributing to a 36 percent drop in refining and marketing earnings. It did not give a reason.

Nor did Phibro owner Occidental Petroleum say how the storied trading firm, run by Andy Hall, who famously landed a $100 million pay-day for calling the oil market right in 2008, managed to slip into the red this time.

He was ahead for the year at mid-year. So he had, depending on how you view it, a modest loss in the second quarter, Occidental chairman Stephen Chazen said in an earnings call. Chazen said Hall is now well ahead for 2011, suggesting Oxy would be looking beyond the latest blip.

It's like an NBA (basketball) game: You may as well tune in the last 30 seconds and forget the rest, said Chazen, whose predecessor Ray Irani bought Phibro two years ago from Citi after an uproar over Hall's bumper payment.

The downturn comes a week after Goldman Sachs and Morgan Stanley , the once-dominant commodities duo on Wall Street, reported significantly lower commodity earnings in the volatile second quarter.

Although analysts say it's hard to make generalizations based on a single quarter's performance, the results suggest the fierce rivalry in the crowded commodities space is taking a toll on some of the industry's once-stellar performers.

There are lower margins and the market is a bit overcrowded, said Olivier Jakob at trading consultancy Petromatrix in Zug, Switzerland.

Price discovery is becoming clearer and consumers are more alert and there's more competition for things like the execution of hedges. The market has gone through a learning curve.

Several major competitors appear to have thrived, however, including Germany's Deutsche Bank , which reported its best-ever quarter in commodities thanks to a good performance in precious metals, oil and gas.

Deutsche did not disclose specific figures but said commodities had helped offset an otherwise mixed performance in its fixed-income, credit and commodities division (FICC), which had revenues of 2.3 billion euros ($3.3 billion), up 8 percent from last year but down 37 percent quarter-on-quarter.

It did so without taking significantly more risk in the market than last year. Value-at-risk in commodities -- a measure of how much money could be lost on an average day -- edged higher to 13.2 million euros ($19 million) in January-June compared with 12.7 million euros through 2010.

JPMorgan Chase , which has invested heavily in its commodities division, was also said to have come out strongly, with overall FICC revenues of $4.3 billion for the second quarter. By contrast, Goldman earned $1.6 billion and Morgan Stanley $2.1 billion.

TOPSY-TURVEY?

The second quarter was particularly tricky to call.

A more than $10 dive in oil prices on May 5 caught almost everyone unprepared; neither were many ready for Western nations to announce a release of emergency oil reserves on June 23.

Corn prices tumbled 23 percent in the second half of June, while silver crashed by 30 percent after briefly touching a record high in early May.

The volatility reduced hedging business from customers, banks say. Proprietary positions may have also been hit by the surprisingly large gap between U.S. and European crude oil benchmarks, which has continued to balloon to record levels, defying most analysts and pundits.

BP said in April it expected U.S. crude discounts to other grades to narrow in the second quarter, but the spread widened to around $20 per barrel or more from around $12 at the time of the prediction.

Trading losses erased gains from improving profit margins in refining. BP said its global refining indicator margin averaged $13.92 a barrel in the second quarter, up from $11.04 a year earlier. Earnings from refining and marketing fell to $1.34 billion from $2.08 billion in the same period of 2010.

Inherently there is a substantial amount of volatility from quarter to quarter, Byron Grote, BP's chief financial officer, said on a conference call.

Sometimes it (trading) is a positive contributor and sometimes it's more of a disappointment as it was in the second quarter, Grote said.

BP rarely specifies its oil trading profit or loss. The loss in the second quarter followed what it called a particularly strong first-quarter result.

(Additional reporting by and Barbara Lewis in London; Editing by James Jukwey, David Sheppard and Dale Hudson)

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