4 years IB -> Top 10 MBA -> Phys Oil Trading?
There have been a few topics posted recently from people who work in physical trading, so I thought I'd post this up as well. Hopefully I can get some help.
I did 4 years of IB @ at brand name firm. Attending a top 10 MBA this fall. Have recently taken up a very strong interest in physical oil trading. I have NO experience in energy whatsoever (I did industrials / infrastructure during my IB stint).
Given my age (25, 27 at graduation), has the ship sailed to get into physical trading? From what I have read, it seems it takes a few years to work through the ops -- will my age turn off future employers?
As for why my sudden interest in the field: a couple of family members do private sourcing deals with some volatile OPEC countries in the Mid East (think Iraq, Iran, Libya, etc...). They essentially act as brokers. After extensively speaking with them, I find their work super super interesting (sourcing, arranging logistics, finalizing deals, getting paid, etc...). Physical oil trading is the closest thing to what they do without all the (sometimes life threatening) risks they assume.
Some questions I have:
1) I am more interested in the deal making / sourcing / origination of the physical trading business. Is it the traders who do this as well?
2) Not sure how interesting an ops role actually is. Read that ops people tend to sit next / close to traders. So that might make it somewhat exciting. Is this correct?
3) I am much more interested in working in Europe, with a specific focus on the Middle East. Is possible to only focus on 1 part of the world?
4) Would the the large players (BP, Glencore, Tra, Vitol, etc...) ever consider someone with my background? A quick linkedin search didn't yield many MBAs doing physical trading
5) Based on my interests, are there any other roles that I should be considering outside of physical oil trading, in case that doesnt work out? Maybe internal M&A at one of the supermajors?
Sorry for the long post.
Thanks in advance.
I think after 4 years of IB, doing an ops role would be a step down. I work on a major oil trade floor in finance. I do performance related analysis, I have schedulers, market analysts and traders who sit next to me or around me...the job is interesting but the opportunities can feel limited at times. It's very hard to become a physical trader at my company and for some people it's nearly impossible. The lifestyle is pretty incredible though, the traders work about 40-45 hours per week and get paid pretty well.
I think internal M&A would be a better choice. Guys from our Corp Fin group travel to Brazil, Mid-East and Asia for transactions all the time. Spending a few weeks in Rio de Janeiro for work would be pretty awesome.
I know the numbers will vary widly, but how much are the good oil traders making including bonus?
I'm really not 100% sure on the structure of compensation at a major. Some of the traders at my company are pretty wealthy though. I read somewhere where Monty09 said that compensation is generally between 200k-500k all in. Judging from the standard of living I see, this range is about right.
Thanks for the response. Ya, I'll def look into internal M&A/Corp Fin jobs. At your firm, are you aware of any other roles that could be of interest?
Another question to anyone else who is reading: what books would you suggest I pick up? I just got my hands on Oil 101 -- started it today. Anything else?
The Prize is a good read too
It's not a book, but I like reading Reuter's Inside Oil Newsletter. It's got short summaries of the top oil news items which is nice. You can sign up here: https://forms.thomsonreuters.com/commodities_preference/ Or you can check out today's here: https://customers.reuters.com/community/newsletters/oil_us/IOA_Jul_26_2…
The Prize looks more like a history book, no? Pretty bloody long as well. Thanks for the suggestion, might pick that up as well.
I know of some commercial development roles that look very interesting. These guys are like the Strat guys but purely focused on commercial (trading) activites. For instance, they basically evaluate projects to see whether or not they would add value or not. From what I've seen, most of these types of roles go to former Petro Engineers but I wouldn't think having a banking background would put you at a disadvantage.
Some Treasury roles are interesting but then again those are more finance related than you'd probably want. For the most part, I think being in an M&A capacity at a supermajor oil company would be the ideal job IMO.
I know of a former Ibanker who went to Wharton for his MBA and now works as a senior economist (after a few years of Internal M&A). He is now working in the UK for activity related to the North Sea E&P work.
Generally speaking, MBA>trading in any asset class is going to be extremely tough. Wny don't you shoot for banking with a focus on the oil&gas sector? It may not be trading, but it will still expose you to the fundamentals of the industry, without the downside of trading.
To be honest, don't think I want to return to banking. Not a fan of only being an advisor -- want to work with tangible stuff.
I'll probably aim for either internal M&A, commercial roles, or development programs (where one can rotate into supply&trading functions) at all of the majors.
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My issue with hiring, championing someone like you is "#2". Typically we look for people who can understand how the not so exciting stuff is apart of the bigger picture and important. Also that this is one of the areas of finance where "mid-office" is not a dead end is actually very important.
Finding something non-exciting, could make you average/complacent/bored and average ops people are the ones who mess up things in the middle of winter that costs $$$.
Lastly if you plan to go down the ops/midoffice to trading route. I suggest you never ever again type "top 10 mba" you will be laughed at. This is the north-american view, I could see europe being much more prestigous warranted.
Valid argument. Comes back to what pacman said earlier: some might see it as a step down from my current career progression and question my commitment to the job. Have you seen people from an MBA come into ops at your firm? Have they done well?
Point taken on the top mba remark.
I have seen both sides of spectrum, guys come in and totally kill it and run up the ladder, higher the ladder the more value people see in the MBA.
Seen those come in and think they top10 mba and hot shit vs the dude from state college whos worked 2 years in the industry and just get owned.
Basically MBA has little value, or says anything about how well you would do at a junior level. Just one path to get there, others take diff paths what you do when you get there is what matters.
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Thanks a lot for the info!
Will gun for oil trading during bschool.
One last question: any place I could learn more about the physical oil market? Obviously there are a bunch of resources for stuff like IB/PE/Paper trading; any such resources for physical? I want to be as prepared as possible before I start networking.
King of Oil, Energy Trading and Investing.
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