Good Commodity Trading Firms?
Does anyone have a list of the better commodity trading shops? I'm trying to live in Houston, but am okay with another city, and know the big names (BP, Shell, GS, Noble, etc), but are there any smaller shops that are doing a good job?
Noble probably shouldn't be on that list..
Good catch......
like this
There's a bunch in Houston. Off the top of my head...
Prop trading shops : Gunvor, Mercuria, Vitol, Glencore, Trafigura
Producers/Midstream : Shell, BP, Phillips 66
Other companies like EDF, Calpine, Castleton, ENGIE, Talen
I work for one of the prop trading shops I mentioned above if you have any questions
Commodity trading company (Originally Posted: 08/03/2013)
What profitable investments could a commodity trading company make with minimal risk?
Have you worked at any other trading firms? Just curious about the differences in culture between oil majors and prop shops?
While I'm in metals and not oil, generally speaking the biggest differences are the approach to risk and the scale of assets.
Even the most aggressive traders like BP and Shell are going to be less gung-ho than a merchant like those listed above when it comes to risk.
But in a career, that is not the end all be all. Shell is by far the largest oil trader in the world for instance, and they have way more in terms of assets than the merchants. Earlier on in your career, that experience is absolutely invaluable. If you look at the bios of most of the top traders at the shops you mentioned, they almost all have Shell/BP experience. That's because they have experience dealing with assets and huge flows that you won't even find at a Vitol/Glencore/Trafi.
This holds somewhat less in metals, but the difference in understanding between someone who worked at BHP/Rio/Glencore vs. a smallish metal trader is pretty vast as well.
Generally speaking I would say focus on getting experience at the biggest shop possible first, worry about getting a risk taking role later.
I've only worked at 2 of the prop shops I listed and one of the "other companies" I listed, so I can't speak to the culture at supermajors. You can look at my response to the other poster about prop trading vs supermajor. What GoodBread said is spot on, there is definitely more risk taking as we don't have many assets to trade around.
If you're asking about how the work culture is, its a pretty relaxed environment as long as you're generally smart and hard working. Like I said in the post below, these shops run very lean by nature so whenever a problem arises that you can solve, you are expected to be able to solve it no matter your job title. I really enjoy it as you get to push your skill set in ways you wouldn't at other shops.
Buy gold.
Thanks for the reply. Is there a reason you chose a prop shop over a producer? Also, are you able to move up to a trader role faster at firms like Gunvor or would BP and the likes be a better bet if your goal is to become a trader quickly?
Most majors do 3 year rotational roles before you can become a trader. I hear most prop shops hire traders externally and it's hard to be promoted to a trader from scheduling or other roles
If you aren't a trader yet in crude/products/LPG/LNG/etc.. I think you stand a better chance starting at a Shell/BP, particularly if you want to be involved on the physical side. The pipeline (ahem) at independent traders isn't really there.
That is different for metals where there is a good mix of home-grown and mining major talent on the risk-taking side though I would say that the very top guys tend to have spent most of their careers at merchants if not all of it.
Also, making it your goal to become a trader "quickly" is a bit of a non-starter. There is a lot of being at the right place at the right time and it's a career where you have to be ok settling in an ops role for a bit and doing it with a smile. If you start at a top shop and quickly jump ship to a smaller guy to get some P&L, you might be shooting yourself in the foot long-term (just imagine a guy who went to Noble from one of the firms listed above).
This being said, Shell and BP seem to have pretty structured programs where you have a shot at becoming a trader after ~3 years. That is a about as good of a chance as you will get.
Like others have said the pipeline to a front office role is definitely a lot more defined at a supermajor like Shell/BP due to their rotational programs. I work at a prop trading shop mostly because that was just the opportunity presented to me.
However, one huge plus for working at a prop shop is that your are exposed to a very wide array of products and your work is very diversified. For example, I'm a quant in the risk group and we cover a bunch of products ranging from crude/ natgas, to corn, bitumen, ethanol, gas, diesel, etc. I've worked at one of the "other companies" I listed and often times a middle officer or risk analyst would just cover one of those products.
Also , since these shops run very lean by nature, your job description is not at defined as it is at majors. For example, even though I'm in risk, I've talked to our natgas traders about what bid to place on a structured gas daily option. You also get to see how a lot of these products are related, i.e how the middle distillates market effects the price of crude and vice versa.
Hope that helps!
sell gold
option straddle gold
You should really consider answering job application questions on your own instead of trying to disguise it as a topic for discussion.
call spread on coffee.
Does the logic of getting to one of the majors (BP, Shell) apply to those looking at origination roles instead of trading? Is that also the best place to start and get some good experience? I realize that origination and trading work hand in hand, but just wanted to check if there were any differences. Cheers.
What are you looking to originate? In crude and products most of the originators have physical trading backgrounds. You're not likely to create much customer flow business without building the network first and trading is generally the best way to build that network of decision makers in the physical commodity space.
If you're interested in gas, power, renewables then there are more direct routes to marketing and origination without trading first.
However, I would say that for any physical commodity path it is best to start on the trading side. Sort of easier to do whatever after starting in the hardest part of something.
Gotcha. If you don't mind me asking, what are the more direct paths to origination (gas, power, renewables)without starting with trading first, like you mentioned? Curious to know. open to trying trading route and non-trading routes after college. Thanks for any help
If I wanted the oil route I’d start at bp/shell for first 6 years. 3 years rotational 3 years trading. Then I would look for a chance to go somewhere to make more money. Like prop.
But I also wouldn’t launch a career as a oil/gasoline trader right now. I guess I believe in battery cars eventually taking over maybe 6 years maybe 15 so would look for a different product group like natty gas.
For gas BP or Castleton
A few others...
(somewhat prop) Mercuria (S&T) Macquarie (production/origination) Total (for Ng & LNG)
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