Full time offer help: Oil Trading vs Power Trading
I have two opportunities I am sorting through. The first is a graduate rotation program at an oil major and the second is a junior power trader role at the trading arm of a utility.
I’m interested in the oil opportunity because oil trading is interesting with how macro focused it is, plus it seems like oil traders are some of the best paid commodity traders. Biggest worry is that it’s not guaranteed to lead to a trading seat.
And I’m interested in the power role because I’d go straight to a trading seat to learn from senior traders, plus I’d be trading around a 100% renewable portfolio of assets. So I’d think this skill set will become increasingly valuable over time. But, it seems like power traders don’t make much relative to other groups.
Does anyone have an opinion on the two offers? What’s the outlook on the two industries? I could see volatility in power die down as more storage is built
what ISO(s) would u be in?
Ercot
isn't an ISO different from a supplier? Or is just the case that an ISO and supplier are integrated in US power markets?
ERCOT power trading is fun and those guys get paiiiiiddd. Ever heard of adam sinn?
I would favor the junior power trading role, esp since its at a utility you would get to learn alot, transition that to a trading shop like vitol or mercuria or have a well-paid stint at a bank like BoA or JPM and get paiidd when ERCOT LZ north or HOU blow out just one day could make your whole year
I'll add that if someone would have given me the advice to take power trading when i was 22 years old i would have disregarded that and taken the oil trading 100% because its oil trading and its sexy. But after 10+ years in the business i would have taken the power trading role in highsight
When i was 22 i did choose the oil trading route because it was sexy. That didnt last long and i went to power trading which was fun
any reason why you prefer power over oil?
I appreciate the insight! How hard is it to transition from power to nat gas/carbon/LNG? It seems a lot of people move between power/natty/carbon but I’d think LNG is a similar skill set to oil trading?
Just asking because it seems like there could be a lot of demand for people able to trade LNG who can also manage risks around ETS exposure/ be able to deliver carbon offset cargos
more volatility, more niche market, not subject to worldwide speculation. bigger slice of the pie vs. trading oil
And I'm assuming that'll go away and we'll call these days the golden age of power trading in 20 years?
I'm guessing you're on an Equities or Credit desk if your reason for going into oil is macro, otherwise you'll be asking for rates/FX.
Why do you want to go into commodities? just for the sake of moving from research to trading?
Just wondering - are Energy roles limited to Texas? Or are there NYC roles available for it? I understand ERCOT is Texas, so my gut is telling me you'd have to be in Texas for it.
Plenty of roles in the Greater NYC area (NY/CT/NJ) for energy trading not just Texas. Of course Houston the energy capital though.
Connecticut for some hedge funds. Roscommon analystics is pretty large and in NYC. Susquehanna is somewhere in the northeast. Morgan Stanley is NYC
I'd say 90% of the role are in Houston, maybe 2-3 in Austin
Really comes down to what you enjoy and strengths. ERCOT power trading is going to be much more "data intensive, quantitative role" and much less on the soft-skills side. Oil rotation is going to be a lot more soft skills and the culture of the desks much different.
Both sets of traders get paid well, I would not worry about the outlook for either role we are just picking hairs here. Figure out which fits better culture wise and what your strengths are.
Can confirm. Worked in nat gas, now in power. Significant difference in trading styles & skillsets. Gas very relationship based & physical. Elec very math/programming & elec engineering even. Although some of the real-time & day-ahead stuff is discretionary; FTR/CRR stuff is all computers.
Btw I'll add that all the o&g shops I worked with in my gas role are now signing up to join elec. Should show you where everyone's going. Macro trend, get in front of it if you want the long haul.
I found your answer to be the most in-depth, lol beans thank you very much
I went the other way and choose power first the oil... I dont think you could go wrong either way... but ercot power at a UTL is a great place to get a legit education
What’s the reason you decided to switch to oil?
Depends on which utility and if you're really spec trading a prop book or just balancing cash/flows. Some of those rotational programs are really worth the time/investment for your career.
It’s a utility that has a proven trading arm. Not a perfect comparison, but think of it like a role at Koch Supply & Trading.
And the core responsibility is to hedge/ optimize asset production, but there is also an expectation to run prop trades as well
I’d probably go for the Jr power trader role. Oil is for sure hot rn and both traders get paid well but as you said at least you’ll be working directly with traders in the power role so they can see your work product way more than a rotational program
Don't worry about comp. If you are a good trader you will get paid either way.
Depends on the shop..lots of guys got screwed on pay from 2021. Hence the record musical chairs in nat gas and power seats over the past 3-6 months
Get screwed one year, move to somewhere better. Long term, being a good trader matters more than product or shop. I feel like every trader is going to get screwed at least once in their career on a bonus. I know I have.
yeah i've gotten screwed 3/10 years its almost a right-of-passage in this business
3-4 here...
power did X, nat gas did Y... coal lost a ton.... we have a coal group?
your bonus is this....
WTF!!!!!!!!!!!
POWER BABY!
There's a lot u can trade inside power:
If u want to be quant, trade congestion in an ISO.
If u are a macro guy, trade heat rate and gen stacks.
If u are a drug and gambling addict, trade balday.
Overall, there's a lot to do in the market, and it's NOT getting more efficient. ERCOT util is a good place to start to learn, and a lot of exit opps into prop shops/funds.
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