More amazing stories are popping.
This one is about Semgroup.
We go back in time. To 21st July 2008.
From Reuters:
NEW YORK (Reuters) - Semgroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company.
The Tulsa-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions Semgroup bought to hedge against its 500,000 barrel-per-day trading business.
This one is about Semgroup.
We go back in time. To 21st July 2008.
From Reuters:
NEW YORK (Reuters) - Semgroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company.
The Tulsa-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions Semgroup bought to hedge against its 500,000 barrel-per-day trading business.
And
Semgroup took a $2.4 billion loss on July 16 after it transferred its New York Mercantile Exchange oil futures trading account to Barclays Plc, converting what they called "loss contingencies" into an actual loss.
Included in the NYMEX loss was $290 million owed to Semgroup by a trading company owned by co-founder and former chief executive Thomas Kivisto, who was placed on administrative leave on July 17.
We all remember that right at that time oil peaked at 147 USD/oz. Then this peak momentum turned rather quickly. Is this a coincidence?
SemGroup got themselves in trouble because they sold NYMEX furtures beginning round 70/80 USD as a hedge. Now, these guys were professionals. How come oil went higher to 140 USD/barrel?
Should it be possible that the steep hike of the oil price was orchestrated to bring down Semgroup?
At least that’s what Forbes writes:
But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup’s collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas Intermediate crude to the point that it would generate fatal losses in Semgroup’s accounts.
“What transpired at Semgroup was no less than a $500 billion fraud on the people of the world,” says John Catsimatidis, the billionaire grocer turned oil refiner who is attempting to reorganize Semgroup in bankruptcy court. The $500 billion is how much the world would have overpaid for crude had a successful scam pushed up oil prices by $50 a barrel for 100 days.
This article mentions that Citi, Merrill Lynch and especially Goldman Sachs knew the trading book of Semgroup. The biggest counterparty of Semgroup was J. Aron & Co, the commodities trading arm of Goldman.
Semgroup took a $2.4 billion loss on July 16 after it transferred its New York Mercantile Exchange oil futures trading account to Barclays Plc, converting what they called "loss contingencies" into an actual loss.
Included in the NYMEX loss was $290 million owed to Semgroup by a trading company owned by co-founder and former chief executive Thomas Kivisto, who was placed on administrative leave on July 17.
We all remember that right at that time oil peaked at 147 USD/oz. Then this peak momentum turned rather quickly. Is this a coincidence?
SemGroup got themselves in trouble because they sold NYMEX furtures beginning round 70/80 USD as a hedge. Now, these guys were professionals. How come oil went higher to 140 USD/barrel?
Should it be possible that the steep hike of the oil price was orchestrated to bring down Semgroup?
At least that’s what Forbes writes:
But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup’s collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas Intermediate crude to the point that it would generate fatal losses in Semgroup’s accounts.
“What transpired at Semgroup was no less than a $500 billion fraud on the people of the world,” says John Catsimatidis, the billionaire grocer turned oil refiner who is attempting to reorganize Semgroup in bankruptcy court. The $500 billion is how much the world would have overpaid for crude had a successful scam pushed up oil prices by $50 a barrel for 100 days.
This article mentions that Citi, Merrill Lynch and especially Goldman Sachs knew the trading book of Semgroup. The biggest counterparty of Semgroup was J. Aron & Co, the commodities trading arm of Goldman.
Forbes continues:
When crude oil peaked in July, Semgroup ran out of cash to meet margin requirements on options contracts it had with Aron, contracts on which it had paper losses of $350 million. Desperate to survive, Semgroup asked Aron to pony up $430 million it owed on physical oil. Aron said no, declared Semgroup in default on its contracts and demanded immediate payment of losses.
Semgroup went out because they couldn’t come up with the margin anymore. A classic if you want to take out somebody.
Then came Barclays:
Shortly before it filed for bankruptcy, Semgroup sold its trading book to Barclays Capital. Barclays’ bold bet was that the price of crude would fall, erasing the losses. It is believed that 30 days later Barclays was sitting on a $1 billion gain as oil indeed fell, to $114 a barrel. Barclays wouldn’t comment other than to confirm it still owns the book. That prices plunged after Semgroup failed is more evidence of manipulation, says Catsimatidis: “With the portfolio in Barclays’ hands they could not squeeze the shorts anymore. The jig was up, and oil collapsed.”
Of course all conspiracy theories are flatly denied.
But how much the world has paid for this game?
And now we pay up again to save these guys…
No comments:
Post a Comment