Get into energy trading now? job prospects, salary, etc.
Hey all, I was wondering what your opinions were about getting into energy trading now? I have an opportunity to work for an established hedge fund (>$20bn) in their energy trading desk right out of undergrad and am strongly considering it.
Still, I have the impression that the energy market in particular is so volatile, esp. in nat. gas and power, that the returns can be fantastic... or they can ridiculously bad. Amaranth is an obvious example, however cliche. What happens one year in, the desk loses millions and is fired? Is that feasible?
The hedge fund element is also something that I'm curious about. All my friends are heading to banks and though I have no interest in the "corporate culture" per se, I do wonder if starting out as a market-maker before going to the buy-side is really as important skill-wise as some say.
Last question, with less job security should come greater pay to compensate for the risk right? How much is the typical salary/bonus of newbie energy trader? Is it worth it?
Any comments or thoughts would be much appreciated.
I would say it depends on how risk averse you are? If you feel like at an earlier age its better to take some risks, then energy trading just might be a new, exciting discipline thats becoming almost like its own asset-class. However, trading energy is still very volatile, so it depends on you. You may just become the next all-star trader and network your way into better and bigger jobs later on, but you could also become the next Brian Hunter..
Must either be Goldman, Bridgewater or DE Shaw. Honestly, working at either of these three shops won't disadvantage you in the long run. Fact of the matter is, energies are themselves volatile commodities. Natgas in particular is just absolutely crazy at times. However, that's not something that should scare you away. Remember that LTCM went broke trading government bonds, which are some of the least volatile instruments to trade. Risk is determined not only by the volatility of the traded instrument, but the position sizes as well.
One thing to consider here is exactly what the job will be. As far as hedge fund trading goes, the exact role will really depend on what kind of shop it is. For example, it may be that at Bridgewater, you're directly involved in making investment decisions and in time, you'll have your own P&L. It may be that at DE Shaw, you'll just be executing trades that a computer spits out, which is perhaps a less attractive job. Make sure this particular job allows you to make intellectual contributions that affect P&L.
If you'd like to discuss further, feel free to send me a PM.
Bridgewater traders are purely execution only from my understanding and I heard it from a guy who works there.
This is definitely the kind of thing you want to know, before taking a job.
Thank you for the posts everyone. I really appreciate it the advice.
Any ideas on salary/bonus info I can compare my offer to?
I think that no one should worry about taking a job at a >2bn fund over an investment bank. Especially when you get into the 10s of billions, its practically the same thing 'job security' wise. and the only reason commodities are 'perceived' as so risky is because they are volatile - but most investors are looking for the returns anyways - so typically they dont get scared away by down years as anyone intelligent would come to expect that.
ivyleaguer i started out on the buyside out of school and i can give you some color on salary/bonus potential but it basically tracks investment banking / sales and trading people for the most part. feel free to pm.
I think that no one should worry about taking a job at a >2bn fund over an investment bank. Especially when you get into the 10s of billions, its practically the same thing 'job security' wise. and the only reason commodities are 'perceived' as so risky is because they are volatile - but most investors are looking for the returns anyways - so typically they dont get scared away by down years as anyone intelligent would come to expect that.
ivyleaguer i started out on the buyside out of school and i can give you some color on salary/bonus potential but it basically tracks investment banking / sales and trading people for the most part. feel free to pm.
I'm gunna take a bet and say you are at DE Shaw. Take the job by ALL means.
Even though there's tons of volatility, a fund like DE Shaw won't gamble like amaranth did.
"What happens one year in, the desk loses millions and is fired? Is that feasible"
This is very feasible. Given that you are straight out of undergrad, you will probably have the most job security.
Will you start out as a trader? You're most likely be an "analyst." Your salary will prob track IB and if your desk does well, you'll prob match your salary or even 150%.
Although I'm not too familiar with large hedge fund bonuses, most smaller hedge funds, banks, and energy companies use a 10% of P&L type bonus calculation.
energy trading - Big players in this field? (Originally Posted: 04/12/2007)
Who are the big players in energy trading?
What BB banks have the best energy trading desks?
Where (geographically) are these desks? Anywhere besides Houston...? - Although Houston is NOT a problem.
Do energy trading desks take undergrads FT or for the summer?
Any additional information that you could communicate would be greatly appreciated.
Thanks in advance, +Hammy
So...after reading a few articles, I now know most of the major BB's and many MM's have trading desks.
Are they in NY / Houston / ??
Are these quant. based or macro based? Obviously, derivatives will be quant. - so to what extent are they used?
Again, input would be greatly appreciated.
Good night, +Hammy
Are you talking about prop or what?
Yep, prop.
+Hammy
BP's traders are compensated similarly to guys in S&T at I-Banks. Their headquarters is in a Chicago suburb, but they have offices in Texas and California. The deal with energy trading is that if you work as a trader at an oil company, it's very easy to get hired at an I-Bank or hedge fund.
Saying you're from BP's IST is sorta like saying that you studied Comp. Sci. at Cal Berkeley. A lot of people will say, "Oh. That's one of the nicer Fortune 500 companies." People in the business of trading oil, however, will know that the traders you work with make the traders at most I-banks look like dunces. Last year, the group accounted for roughly $2 Billion of BP's profits.
They do offer summer internships, but it may be too late for this summer.
When I interviewed there, I got the impression that BP had this nice, low-key atmosphere for a trading division. These guys were making money, and were good professionals, but they didn't seem all that intense like most Wall St. traders.
BP came to our school and did a trading simulation. The guys were really chill and one of the guys was like keifer sutherland in every way. the guy giving us the schpiel kept making references to getting drunk. it was a great time.
that said, i've heard BP has had their reputation damaged from insider trading scandals because of trading on news that only the company would know since it operates a shitton of oil rigs in the gulf coast. for that reason, if they think you're gonna be a knucklehead i.e. do insider trading, they probably won't hire you. one of the kids I met at the simulation was going to be working for BP's IST during the summer and he did not seem to be anything special other than he was a pretty chill guy. Wasn't a trading genius or anything like that.
i don't think theres an issue with bp trading on their own info.
lots of energy desks are in nyc
NYC has lots of energy desks, but again, if you're looking for a firm that specializes in energy, BP in Chicago accounts for roughly 25-30% of the open interest at NYMEX. They had about as much office space and as many traders devoted to energy trading as many BBs have devoted to trading in general at their New York offices.
Exxon, Shell, and Conoco also do their own trading, but you generally have to be an oilfield engineer or something like that for a few years before getting into trading. It's also less proprietary than at BP.
Banks tends to focus on energy derivatives and structuring, more so than just clearing futures trades. Bloomberg posted an article last week with some good analysis done by a consulting firm on the top banks in energy derivates. Basically, Goldman is first, Morgan Stanley second, then Barclays Capital. Then after a big gap you have Deutsche, JPM, and Merrill, though the other banks are aggresively trying to build. I believe Citi is the only bank whose US commodities operations are primarily in Houston, although Merrill's might be as well. Goldman, Barcap, and Morgan Stanley are all in New York (well, NY suburbs for Morgan Stanley). Also, I'm not so sure BP pays as much as the Street. We have a lot of ex-BP guys on my desk....
Some of the focus is a bit more on managing supply and delivery stuff. If you don't wind up at a trading desk, you may be in supply (The money is still very good there), and asked to help manage delivery of 500k barrels of oil to a Chevron refinery in California and get it there by a certain date.
All of it's interesting stuff that involves plenty of analytical skills.
I was under the impression that the pay was much closer to the street than it was for a typical job at an oil company, if not as good as or better. They said they competed against both the Chicago trading firms (which pay more than NYC) and the I-Banks for new hires. However, it's also my understanding that the exit opps at BP are much stronger than they'd be at an I-Bank, so that may be the reason they can compete.The Houston energy trading desks (and elsewhere outside of NYC) usually pay a bit below the Street, but it evens out when you factor in cost of living.
Bear Stearns is trying to increase their energy trading presence. They are located in Houston and I know they recently interviewed some people here.
http://www.financialnews-us.com/?page=ushome&contentid=2347481237
How hard is it to get into BP IST?
I may be wrong on the BP pay issue. We just have a number of former BP guys on my desk, most of whom don't seem to like NYC that much, so I'm guessing they must have received some nice packages to move here. That's one of the funny things about commodities desks, is the fact that so many people the banks are trying to hire away from energy companies require a premium to move to New York. Versus many standard Ibanking people who would require a huge premium to move to Houston....
bp has some FUCKING AWFUL bonuses. like 10-15% of base. around 20 top traders quit his year because of their shitty salary, and reports semm to indicate that resignations were really common around this time of the year.
but yeah, big oil companies like bp, shell, statoil frequently train the best traders in the field. Olav Refvik, a top oil trader with Morgan Stanley, was at statoil for something like twenty years beforehand
Are you sure bonus at BP isnt 10-15% of P&L?
Energy is discretionary.
http://www.afr0jacks.com/ Afro Jacks
energy trading Information (Originally Posted: 02/25/2010)
Hi,
After reading the forums a lot on this site I have become more and more interested in Energy Trading. I want to move out to Colorado or around there after I graduate from college in a couple years and would like to know what is the life of an energy's trader like. Are there good job prospects out in the west for energy trading and also what would the pay be like for an entry position. I really value renewable energy, so is there a place where I can trade that deals with renewable energy. I am very new to this so sorry if my questions are pretty obvious.
energy trading=Houston, Texas
energy trading = Houston, TX for all except MS and GS, I think. They are in NYC.
what is the pay for these jobs and are they highly competitive? What would I do at one of these jobs?
energy trading jobs are very competitive, partly because of the upside potential and partly because of the smaller size of the business. energy is still not very regulated, and many who are supposed to trade order flow take proprietary positions. also, compared to equities and fixed income, energy trading is a much smaller-sized business and has less opportunities for entry. as for location, the three hubs are NYC, Stamford and Houston. most of the funds and several banks are located in the Northeast, with other banks, funds, and major physical groups being down in Houston.
entry level positions are hard to come by, there are two ways that I would suggest people go with it. either try to get into an analyst pool at a bank (if you're still in college apply, if you're working consider a master's at a good school) where you may have a shot at working on the commodities trading desk, or start from an operational role (scheduler, etc.) at a physical trading firm where you're responsible for such ground level activities as making sure the gas flows from one point to another, etc. many of these physical energy firms like to hire within, and many of the traders there started in operations, so you have a better shot that way.
agree to all expect second part..all jobs in energy are tough to get... i know we have tons of people applying to back office jobs.. its tough all the way around
Not sure if it's been noted above or not but engineering is a rather popular degree to have among traders. I know the guy that got me into the BB I'll soon be at is the ED of an area of commodities trading for the bank and he started out in a small shop before making several switches to eventually building upthe commodities division at this particular bank.
selling this... you will have less then 5% of floor with eng degrees
There is energy trading in California, Washington, Chicago/Midwest area.
That said bentek/platts and a coupe others are based in Denver I believe. Not trading, more research jobs.
what the poster is looking to do is not traded by a lot of firms. Going to be tough to find those jobs
Correct. I need to learn to read. Would say renewable energy is hardly traded in general to begin with. That is being far too specific. Maybe in the future.
i was once offered a job in emissions and turned it down
If your very competitive and go to a BIG Ten or Ivy school, look into Shell and BP energy trading. They recruit at those schools.
I made it to final round for Shell Energy in Houston, and it seems its extremely competitive to get a job with them in general, trading being extremely hard to get and very desirable amongst EVERYBODY at the superday.
If you get hired at some places, they expect operational work, then you will need to reapply internally with other co-workers to re-battle for positions in the Trading division. If you work for a big Petroleum company in trading, expect to love your job and be very financially comfortable.
I know that Minnesota has some top notch renewable energy research labs, maybe look at the recruiting list for U of Minn, and maybe some of the companies have energy trading.
Btw, just cause its trading, they are going to expect you know a lot, A LOT, of shit about all the industries, internationally as well, and how you fit in the industry, then why you would fit the job (specifically for big petroleum companies). Energy trading companies also admire if their traders were once top notch athletes, because being an athlete requires explosive decisions, just like trading.
Id be interested also in the answer to this question. Also, Renewable like energy trading or renewable like emissions trading?
I dont know how helpful ill be here, but for emissions trading it might be worth checking bluenext and their member list: http://www.bluenext.eu/ .They are also traded here https://www.theice.com/homepage.jhtml .
firm I was at hired away some top guys from a big player in the uk who lead this market. They mentioned the market in the US was simply not there but would be "one day"... i was in an analyst program and choose a power job instead. they ended up resigning and going back to UK... the firm i was at is still trying to grow that desk.
and we have 4-5 people who played sports on my desk of 13
energy trading - Insight in the life and career? (Originally Posted: 04/19/2012)
Any insight into the life and career of an energy trader is very appreciated, as I am looking into this after a masters in energy management is completed. What are the pros and cons, concerning salary, hours, and lifestyle of working for an energy company, a specific energy trading firm, or a bank? Once again, I thank you for any input what so ever.
Search as this has been talked about
energy trading Jobs (Originally Posted: 03/01/2007)
What do they do and who are the major players? Is it possible to move from an ibanking analyst stint to an energy trading job?
Is the job the same as being a HF trader? What is compensation like?
TIA>
try the trading forum. im sure all these questions have been answered in there.
I hear Enron is hiring.
ibanks have been sniping key players from energy trading firms. why anyone would want to go back escapes me
I used to work on an oil and gas desk at a clearing house at the Merck. A lot of traders work for themselves. Other work for proprietary desks that the clearing houses clearing houses set up like the one I was on. Then there are some big trading companies like El Paso; a lot are in houston I think. The Merck and ICE just went electronic so it's getting a lot easier for people to get in.
Energy Trading Questions (Originally Posted: 08/11/2011)
I just had a few questions about energy trading, and there isn't too much information about it on the site. I am really interested in learning more about energy trading, such as how it is different than what most people talk about when they mean trading (prop trading and sales and trading) in terms of skills needed? How are the interviews for it? If anyone is currently working in this industry, or has had some experience, I would love to ask some more question through pm. Thanks in advance.
I would say there is more info on energy then any other product
Most interviewers will expect you to know how to use a forum search feature. Then again that's most.
SB+1
"Energy Banking" vs. "Energy Trading" (Originally Posted: 05/12/2013)
I'm new to all of this. Could someone please explain?
Thanks.
One is Investment Banking and one is trading. Use the search function or better yet, google to find the difference.
To clarify even more, Energy Banking would involve mergers and acquisitions in the energy industry, as well as restructuring and financing energy industry corporations.
Energy Trading would involve the sales and trading of energy industry financial instruments, like derivatives, futures (with crack spreads), etc.
Houston is kind of the center of energy banking and trading in the US, for obvious reasons.
Energy Banking is in IBD Energy Trading is in S&T
In one you bend over for E&P companies and the other you try to bend E&Ps over.
Couldn't have said it better myself.
Energy Trading Job/Firms (Originally Posted: 03/30/2014)
Hello Everyone,
What are the best energy trading firms to work at after college? Basically, this includes both Banks and Trading businesses, that deal with both Physical and Derivatives energy product.
Thank You
Looking at BB's would be a good start, I would think most have some involvement in energy commodities trading. Best of luck!
You should have posted this under trading lol.
Whatever BBs thats leftover (GS, Citi, Barclays, CS), Supermajors(Shell,BP,Total etc), and trading houses (Trafi,vitol,mercuria,glencore etc). Depends on what you wanna trade, some people start off at utility companies as well. There are a lot of other companies out there as well (RWE trading, EDF) more for gas and power.
best firms for energy trading (Originally Posted: 03/12/2010)
Who would you guys say are the best firms to work for when trading the financial side of the energy markets? I am interested in moving to a different firm, and I want to try to get into a good one.
UBS
cargill
There is legislation that is considering not allowing BANKS to trade commodities for their own benefit. I would look into other firms besides banks. Just something to think about..
Thanks guys. I was thinking of firms other than banks.
Energy Trading Shops (Originally Posted: 07/29/2009)
I keep hearing that MS and GS are scaling back their physical energy trading while Barcap, JPM, and DB are ramping it up. I know that GS, MS, and Barcap have historically been the top-tier firms. What do you guys in the energy sector think about this? Are we going to see some switching of the top groups?
i have no idea, but maybe you could find something related under the "energy trading" tag: //www.wallstreetoasis.com/tag/energy-trading
Elite GMAT Tutors: //www.wallstreetoasis.com/page/one-on-one-gmat-prep Invite Monkeys Here: //www.wallstreetoasis.com/invite WSO Guides: //www.wallstreetoasis.com/wsoguides Follow WSO on Twitter: http://twitter.com/wallstreetoasis
MS and GS were never major players in the physical space in the frist place so I dont see them losing any ground.
I thought MS was considered a very physical shop, especially for crude and refined products.
Monty, Do you know anything about Credit Suisse's commodity group?
few people from my desk left to join cs team last year
What are some boutique/regional/successful companies with an emphasis on energy/oil trading? (Originally Posted: 08/15/2017)
Hi guys. Earth science and finance major at a semi-target. My gpa is in the low 3's so I'm looking for boutique/regional banks/companies that I could apply to for s&t 2018. My resume is alright but my GPA is a huge ding so I'm hoping my second major might be interesting enough....
I assume you are looking for gigs in the south?
Kinda hard to straight up apply with the low 3 GPA. There aren't really any companies that fit the profile you are looking for in energy/commodities trading. Most of these are large companies with dedicated recruiting for ft and internships. Best bet could be to look into: brokerage shops, retail providers(just energy, direct energy) Utilities would also be a great avenue( NRG, Nextera, Westar, EDF, Duke)
Realistically depending on how bad you want to break in to the energy trading space I would look at a master's degree at a place like Tulane or Rice. Tulane has a Masters in Energy Management that has quite the alumni network and Rice has a relatively new program called the Masters in Energy Economics. Both would give you a brand name on your resume, a chance to revamp your GPA, and access to recruiting.
Tulane is more trading/business focused and the Rice one is more, as the name suggests, econ focused. Tulane has more history and a more extensive alumni network but Rice has the best name you can get in the Houston area. Both have their pros and cons.
The only reason I suggest more school is because pretty much any large commodity shop has extensive recruiting just like you find at a big bank and will be looking for experience in the space or a very good school/gpa on the resume.
Another possible route would be applying to midstream companies in some type of market analysis or operations role. I can't post links due to how new my account is but google AMLP portfolio and click the first link that isn't an ad and you will find an extensive list of midstream companies.
2nd this. I know the Tulane program gets a few students into trading/risk management roles each year. Plus living in New Orleans for a year has to be pretty awesome in itself.
These programs cost a pretty $$ though so depending on your financial situation this may not be the most economical decision
Aut aut aut esse eum. Optio nihil omnis eveniet reprehenderit sint.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Perspiciatis dolorum vel architecto laudantium amet nobis tempora. At tempora ex qui eos at itaque. Officia et eveniet quaerat dicta ullam. Eaque eveniet recusandae non. Voluptas repellat quod tempore. Magnam perferendis omnis unde minus accusantium blanditiis velit.
Est est doloribus velit dignissimos repellat molestias. Et ea in et. Dolorum ex tempore consequuntur esse. Dolore et culpa repellendus debitis dicta. Autem accusantium corporis odio possimus asperiores porro optio.
Et alias ut fugiat. Nisi laboriosam enim voluptate voluptas. Velit placeat sint qui reprehenderit aperiam.
Quam voluptatem qui aspernatur. Explicabo eum eveniet perspiciatis consequatur dolores veritatis. Qui natus omnis facere ipsum et pariatur laborum ut. Nihil et ratione est libero. Ut quibusdam explicabo sint similique ad dicta ut est. Natus laboriosam aut libero.
Consequatur nihil deserunt odio. Iure dolores reprehenderit in vel iste et iure. Eius magni repellendus eius voluptate nesciunt expedita.
In et earum pariatur id. Debitis eum id molestiae quia.
Aperiam et ut voluptates hic vel. Nisi vel porro alias aliquid at nisi reiciendis deleniti. Et eos a est aut repudiandae laboriosam et.
Non molestiae non nam suscipit possimus. Consectetur dolores blanditiis sit qui hic. Odio autem aspernatur dolorem dicta sit cum rerum. Recusandae dolor explicabo maiores animi et minus eaque quis.
Nisi quo est laboriosam cum provident accusamus voluptas. Harum unde libero vel animi sint natus.