SemGroup, the US physical oil trader, on Tuesday filed for bankruptcy as it acknowledged trading losses of more than $3.2bn in different energy markets after betting this year that crude oil prices would fall. Its collapse came as oil prices plunged to their lowest levels since early June. West Texas Intermediate crude oil fell to an intraday low of $125.63 a barrel, down $5 on the day.

Traders sold oil futures as news emerged that tropical storm Dolly was set to miss oil and natural gas installations in the US Gulf of Mexico.

Oil traders said SemGroup could have exacerbated the spike in oil prices this month, when the market experienced unprecedented swings of more than $10 a barrel, as the company was buying back some previous bets on lower prices.

The bankruptcy of SemGroup, which describes itself as the fourteenth largest US private held company, affects approximately $3.1bn of debt, according to court filings. Oil company BP is the largest creditor, with almost $160m.

SemGroup bet in the futures market that oil prices would fall as a way to hedge its positions in the physical market. But as prices jumped this month to a record of $147.27 a barrel from less than $100 a barrel at the beginning of the year, the mounting losses triggered large margin calls from banks – a request to put up more collateral – draining the company’s cash reserves.

The company said in a court filing that it had lost $2.4bn in oil hedges at the New York Mercantile Exchange and another $850m in over-the-counter energy markets. The credit crunch has exacerbated energy traders’ battle with margin calls as banks are reluctant to extend their credit lines.

Terry Ronan, SemGroup’s acting chief executive, said: “We are taking aggressive steps to address our financial challenge.” Mr Roman said the company would sell now assets.

“We believe there will be significant interest in our assets,” he said. David Kirsch, of PFC Energy, the consultancy, said that SemGroup was “a casualty” of the run-up in prices in the first half of the year.

With the dramatic change in market direction, Mr Kirsch said more bankruptcies were likely, which underlined that for every trade there was a counter-party.

That is particularly important to remember when people are talking about “speculators as the evil force’’ in the run-up in oil prices, he said.

SemGroup’s publicly traded subsidiary, SemGroup Energy Partners, which is not part of the bankruptcy, on Tuesday rose 10.9 per cent on Nasdaq as it said it would be able to carry on its business. It had lost more than 70 per cent in the three previous trading days.



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