July 24, 2008 at 11:07 am #3518
<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
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
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
“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.
July 24, 2008 at 7:18 pm #6695
<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)
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 day 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
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
“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,”
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
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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