Mon Nov 10, 2014 2:06am EST* Denmark's OW Bunker was leading ship fuel supplier* Fuel buyers scrambl...

1. Ship fuel market in turmoil after OW Bunker files for
bankruptcy
Mon Nov 10, 2014 2:06am EST
* Denmark's OW Bunker was leading ship fuel supplier
* Fuel buyers scramble to fins alternative sources
* Ship fuel prices up 1.3 pct since OW Bunker hit trouble
* Fuel price chart: link.reuters.com/vuj43w
By Jane Xie and Keith Wallis
SINGAPORE, Nov 10 (Reuters) - Ship fuel prices rose on Monday and buyers scrambled for new
stocks after the bankruptcy of the world's biggest supplier, Denmark's OW Bunker, due to a
suspected fraud at http://cobaltautoservices.com/auto-shipping-quotes/motorcycle/ is Asian
subsidiary plunged the troubled sector into fresh turmoil.
OW Bunker collapsed under the weight of losses of more than $125 million at Singapore-based
Dynamic Oil Trading, which pushed its debts to $750 million and prompted banks to refuse to extend
further credit.
"At this moment, I don't have any comment. Yes I'm still employed but considering the parent
company's bankrupt, I don't know how this will affect me," Dynamic Oil Trading's credit manager,
Ulrich Hyldedahl Rasmussen, told Reuters.
Traders say that the current market turmoil is related to the sharp drop in energy prices since June,
which has seen benchmark Brent crude prices fall by almost a third as rising output clashes with
cooling demand.
OW Bunker, which filed for bankruptcy in Denmark on Friday, has blamed fraud by unnamed senior
employees for the losses at Dynamic Oil, but has not revealed any details.
The company's internal trading guidelines stipulated that its market price exposure should not
exceed 100,000 tonnes of product, although the executive board could increase that limit to 200,000
tonnes.
In an investor presentation given with its third quarter results on Oct. 23, the company said it had
already racked up a "loss on risk management" of $24.5 million.
"Abrupt transitions between 'high' and 'low' prices... will always be difficult and challenging for risk
management," OW Bunker said in relation to "dramatic price decreases (and) irrational market
behaviour", adding that its fuel oil positions were "out of the money".
CHAIN REACTION

2. Fuel traders said OW Bunker bankruptcy and other problems in the sector have set off a scramble of
fuel buyers attempting to find alternative sources to make up for failing deliveries, and that other
companies could also be at threat over unpaid bills.
"This will very likely trigger a cascade of failures up the supply chain," one Singapore-based oil
trader said.
"If, let's say, you were owed $10 million due next week and now you can't receive it, you will have to
find a way to make up the $10 million at such a short notice. This might be trouble for the smaller
firms," another fuel trader said.
Industry sources estimated that at least half a dozen companies had an exposure of more than $10
million to OW Bunker.
"It is right this (OW Bunker's bankruptcy) has caused some losses to our company, and our related
offices are checking if this can be covered by insurance," said a spokeswoman at SK Innovation,
which owns South Korea's largest refiner SK Energy, although she declined to disclose the size of
the losses.
The downfall of the sector's biggest fuel supplier also contributed to an almost 1.5 percent increase
in benchmark ship fuel prices, which had been in freefall for the past two months during which
prices dropped by almost a quarter.
"I would believe prices should surge upwards, there are guys who would be desperate and being
suppliers, we would take the opportunity," a ship fuel supplier in Singapore said.
Despite the disruption, traders said outright fuel shortages were unlikely due to healthy global
production and a widespread base of suppliers.
OW Bunker had expanded rapidly in recent years. The firm was listed on Nasdaq Copenhagen in
March, in the second-biggest initial public offering in Denmark since 2010.
The company is estimated to have about 7 percent of the global market for bunker, a liquid fuel
refined from crude oil and used to power ships, competing with companies such as World Fuel
Services Corp, Chemoil Energy and Aegean Marine Petroleum Network. (Additional reporting by
Jessica Jaganathan and Florence Tan in Singapore and Meeyoung Cho in Seoul; Writing by Henning

3. Gloystein; Editing by Alex Richardson)
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