BUSINESS
08/01/2008 05:12 am ET | Updated May 25, 2011

Speculation About Speculation: Does A Hedge Fund's Collapse Pin Oil Prices On Them?

Did the collapse of a little-known private oil-marketing firm, SemGroup, play a roll in oil's 14% price drop over the past 10 days? The Wall Street Journal thinks it might have:

The Tulsa, Okla., company filed for Chapter 11 bankruptcy protection Tuesday, citing among other financial woes a loss of at least $2.4 billion in crude-oil futures. Changes in its hedging strategies coincided with big moves in oil recently.

The company had taken out short positions, or bets that crude prices would fall, as a hedging strategy for oil it intended to move through a subsidiary's pipelines and sell to refiners, according to an affidavit filed in Delaware bankruptcy court by Terrence Ronan, SemGroup's senior vice president, finance.

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