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Speculator update – SemGroup Bankrupt, (starts Oil slump?)

Home Forums Refining Community Refinery News Speculator update – SemGroup Bankrupt, (starts Oil slump?)

This topic contains 1 reply, has 1 voice, and was last updated by  Charles Randall 12 years, 9 months ago.

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  • #3518

    Charles Randall
    Participant

    <Speculation update – SemGroup bankrutcy may been trigger oil slump but there are also lot other reasons as well.  Check out the Oil Co. Creditors of SemGroup that also take some $2.4B hit? But One down and a market full other speculators to go! >
     
    Oil Slump May Have Started on SemGroup’s Losses, Analyst Says
    (New York)
    By Nesa Subrahmaniyan
         July 24, 2008 (Bloomberg) — Crude oil’s 16 percent drop from a
    record may have been triggered by Tulsa, Oklahoma-based energy
    trader SemGroup LP that declared bankruptcy this week, an oil
    analyst said.
         With “SemGroup removed from the market, crude oil has been
    free to fall, exactly what SemGroup was hedging against,”
    according to the Schork Report issued by Stephen Schork, who
    previously worked at Glencore Ltd.
         SemGroup, founded in February 2000, filed for bankruptcy in
    Delaware’s court on July 22 as it took short positions, or bets
    that oil prices would fall, as part of its hedging strategy,
    according to a court affidavit. It said it had incurred losses
    of $2.4 billion trading on the New York Mercantile Exchange
    , the
    affidavit showed.
         “Now the only question is, are there more “SemGroups”
    lurking in the shadows?” Schork said.
         Crude oil in New York has fallen $22.83, or 16 percent, to
    close at $124.44 a barrel on the New York Mercantile Exchange
    yesterday, from a record $147.27 reached on July 11.
         In the court filing, SemGroup said increasing margin calls
    related to large New York Mercantile Exchange and over-the-
    counter futures and options positions, and exposure to extreme
    volatility in prices had resulted in a severe liquidity crisis
    for the company.
         After SemGroup failed to put up collateral for its bets,
    the company and its units sold their Nymex trading account to
    Barclays Capital on July 16 with losses in excess of $2.4
    billion, the court affidavit showed.
         Creditors of SemGroup include BP Oil Supply Co., Sunoco
    Partners Marketing & Terminals LP, Valero Energy Corp.,
    ConocoPhillips, Chevron Corp., and a unit of Royal Dutch Shell
    Plc, court filings showed.
     

  • #6695

    Charles Randall
    Participant

    <This is BN article on Dutch firm Optiver BV that is also caught  Speculating crude prices – after CFTC was reluctantly pushed into this by Congress (and trying avoid blame as part problem?). Gives proof that CFTC hasn’t been effecively watching / not looking at facts closely on Speculation untill pressured by Congress (who was really pressured by American public!). But is right track even if these two examples (Optiver & SemGroup) are really just low hanging fruit / short term examples of what has been allowed to happen over last couple years….and is something rest Liberal press obviously doesnt seem want to pursue.- CER Comments>
     
     
    CFTC Alleges Dutch Firm Manipulated Energy Market (Update1)
    (New York)

    By Tina Seeley
         July 24, 2008 (Bloomberg) — The U.S. Commodity Futures Trading
    Commission, under pressure from Congress to regulate markets in
    the wake of record oil prices, accused Optiver Holding BV of
    manipulating U.S. energy markets.
         The allegations against the Amsterdam-based hedge fund come
    as the Senate prepares to vote as early as tomorrow on
    legislation to curb speculation in energy markets and expand the
    commission’s authority and staffing.
         “Congress is looking for someone to blame,” said Kevin
    Book, senior vice president for Friedman
    , Billings, Ramsey & Co.
    Inc. in Arlington, Virginia. “The CFTC is trying to make sure
    it’s not them.”
         Crude oil futures reached $147.27 a barrel on July 11 on the
    New York Mercantile Exchange. Prices have fallen 15 percent since
    that high, dropping to $124.44 a barrel yesterday, the lowest
    close since June 4. Crude oil for September delivery rose 74
    cents to $125.18 a barrel at 1:57 p.m. today on the Nymex.
         The commission took what it called the “extraordinary
    step” earlier this year of publicly stating it had begun a
    nationwide investigation last December into trading,
    transportation, storage and purchase of crude oil. This is the
    first enforcement action to arise from that investigation.
         “Although this alleged energy trading scheme lasted only
    several days in March 2007, even short-term distortions of prices
    will not be tolerated by the commission
    ,” Walter Lukken, acting
    CFTC chairman, said in Washington. A spokesman for Optiver in
    Chicago couldn’t immediately be reached for comment.

                            `Bully the Market’

         The commission’s complaint alleges the Dutch trading firm
    tried to “bully the market” by buying and selling large volumes
    of futures contracts in the closing minutes of a trading d
    ay to
    influence prices. The alleged scheme resulted in a $1 million
    profit for the defendants, the commission said.
         The commission alleged Optiver, along with two of its
    subsidiaries and three employees, tried on 19 separate instances
    to manipulate energy futures markets, specifically New York
    Mercantile Exchange light sweet crude oil, New York Harbor
    heating oil and New York Harbor gasoline markets.
         At least five of those attempts were successful, “causing
    artificial prices,” the commission said. The schemes forced
    prices both higher and lower, Stephen Obie, acting director of
    enforcement for the commission, said at a press conference today.
         In two instances, on March 16 and March 19, Optiver was
    successful in moving the price of light sweet crude, also known
    as West Texas Intermediate, up 79 cents and down 49 cents,
    according to the commission.
         Optiver was founded in 1986, and says on its Web site it’s
    the largest derivatives trading group on the Australian Stock
    Exchange and the Amsterdam exchanges.

                          Chief Executive Named

         Bastiaan van Kempen, chief executive officer of Optiver, is
    one of the employees named in the complaint filed today
    by the
    commission in the U.S. District for the Southern District of New
    York. The commission alleges van Kempen concealed the
    manipulation and made false statements to Nymex.
         The other employees, who were in charge of trading at
    Optiver, were recorded on a phone call “acknowledging that their
    manipulative scheme was `a fun game’ and contemplating whether or
    not they could expand it to other markets, including `soft’
    commodities such as sugar, wheat or corn,” the commission said
    in the complaint.
         A spokesman for Optiver was not immediately available for
    comment, according to a woman answering phones in the company’s
    Chicago office.

                            `Substantial’ Fines

         The company and its employees face “substantial” fines if
    the charges are proven, Obie said. He declined to say whether any
    criminal charges would be filed.
         Senate Republican Leader Mitch McConnell of Kentucky praised
    the commission’s action.
         “As the Senate considers energy-related proposals, we must
    take great care to ensure that any speculation proposals not have
    the effect of driving trades to overseas markets — and away from
    the oversight of the CFTC — as the proposal now before the
    Senate would do,” McConnell said in a statement.
         The Senate may vote tomorrow on its anti-speculation
    legislation, and the House Agriculture Committee is meeting today
    on changes it wants to make to the commission’s underlying
    authority. Obie denied that the timing of the announcement was
    politically motivated.

                            Speculation Concern

         “The notion that financial players can alter one of the
    bulwarks of global crude pricing may play into overwrought
    concerns that speculation can contribute to price inflation,”
    said Book.
         Since December 2002, the commission, before today, had filed
    41 enforcement actions charging a total of 66 defendants with
    energy market violations. Civil penalties to settle the actions
    have totaled almost $500 million, the CFTC said earlier in a
    statement.
         BP Plc last October agreed to pay $303 million, the agency’s
    largest-ever settlement, to resolve the commission’s claims it
    manipulated the U.S. propane market.

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