Career Options? (Disillusioned Oil Trading Analyst)
All,
I'm starting my third year in the physical commodities space here in London and feeling rather blue. The path to becoming a trader was always bound to be long and arduous but after spending a couple of years in the industry, I am concerned it may not be the right fit for me. The roles required along the way are mundane and mind-numbing, and a new trader seat is a rare occurrence due to the size of the operation here—traders typically retire rather than resign.
The compensation structure at the more junior ranks falls between that of Big4 firms and management consultancy. Despite the role being in the front office, there is no performance-based bonus, only the fixed corporate 10-15%. Consequently, the motivation to stay, purely from a monetary perspective, is dire.
I've been reflecting on my career in the physical commodities space, and I'm contemplating alternative paths that might align better with my skills and interests. I wonder if you guys could provide some guidance or suggestions on other career trajectories that individuals with my background could explore. Additionally, I'm curious to know if there are specific firms in London known for being open to professionals transitioning from the physical commodities sector. Any insights or recommendations you could share would be greatly appreciated.
I guess I'm just ranting out of frustration; friends from university are all in high-paying structured careers, while I find myself facing a cloud of uncertainty with rather empty pockets.
If anyone has any questions they would like to ask me, feel free.
is your problem not liking the industry or simply being unable to make trader due to the structure of your current company?
whats the company size/structure like? are you working for one of the big houses? what do you have “mundane” experience on?
need more info to help, but i’m a commods trader with around 10 YOE
It's not about disliking the industry; I'm genuinely passionate about it. My current challenges are more about my company's structure, I guess. I believe I could become a trader, but it would likely take 5-7 years, and I am worried I will be unhappy during that time. It is also a significant risk to take, sacrificing that much time on something that could be futile. I understand this is a trade in itself and perhaps highlights that trading might not be for me if I am unable to stomach this, and perhaps I am more risk averse than I'd like to admit.
I work for a large multinational oil company with a significant market presence. Some of my "mundane" tasks involve producing daily hedge requirements, market analysis, P&L reconciliation, and trade uploads. I often feel that I'm not making the most of my current role but speaking to those who have been in my position before they empathised with my situation but advised me to persevere as it is only a temporary seat.
i’m just trying to have the full picture to give you the best possible advice. it’s common for people in oil majors to do a rotation and then leave for banks or other shops to become traders. if you think your growth in your company will be slow/uncertain and you already have 2-3 years under your belt, you have a few options.
1) try to find a junior phys trader role at trading shops. many junior trader programs (do not confuse with GDP or TDP) like trafigura like to hire people with a couple years of experience. there are other options in energy like CCI and Freepoint as well.
2) go the derivatives trading route, shooting for a trader role in a BB. a lot of presence in europe especially london (you have all big banks there).
3) go to the sales/origination side also in a BB. really solid commodity sales teams in london, from all big banks.
i’ve seen numerous people do all of the above, leveraging on your already existing experience which doesn’t seem mundane to me.
I have numerous connections in my LinkedIn who went on to become traders under five years. Look at Onyx capital's founders career path or one of the head of desk of Geneva trading....both of them started as analyst.....you are too close to your destination and thinking of giving up...I will advice that you try to take on some responsibilities that is more commercial in nature. Speak to some traders and see how you can help them analyze some risk taking opportunities. I have a friend who worked as analyst for 2 years and is now a Gas trader. I know its a different commodity but still the case remains that in energy analyst to trader is the most common path. I am in same boat as you....
Go work for a euro trade house or a pod. Pods are still gobbling up phys analysts
Hey, thanks for the reply, I've been approached by a recruiter for the 'Commercial Analyst' role that Vitol has to offer but before the interview stage they asked me to complete a Python coding test. I can't code in Python, nor in any other language for that matter and no one on my trade floor uses it. Are coding skills a requirement for most trading houses and hedge funds? It's maybe something that's holding back my applications for other firms.
Seems like they threw a “misc mundane tasks” job at you given that laundry list of unrelated “analyst” functions. This is actually a very common situation as there are just certain things that need to be done (trade reconcile, exposure reports, etc) that no one wants to do so they just pass it on.
Ultimately, this is not a skill set that commands a lot of money because while necessary, it doesn’t have a big hurdle to entry and doesn’t have a lot of differentiation when done well. The only thing you list which could have a big hurdle to entry and could be differentiating is market analysis, and if you are really top notch you can find jobs easily at any hedge fund or physical firm nowadays. So I would recommend you shift your role more to that to be more generally marketable. If you want to trade, just find a structured program or make your intentions clear where you are. Don’t let them squirm out of an answer- if they say no, you at least know where you stand and if they say yes- clarify how long and with what requirements.
.
Are you free to message here? I'd rather not give my post history away as people could put two and two together...are you based in London?
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Nice try Jake from state farm
5-7 years of 'mundane tasks' is not that big of a deal in the scheme of a career. IB, consulting, Big4... that is an entire career of mundane tasks.
Also regarding those 'mundane tasks' that are post-trade, being a trader is essentially being able to do that analysis pre-trade and decide whether to go for it.
I agree comparing freight rates, calcing the cost of terms etc is 'mundane' but it is a job at the end of the day.
The big difference as a trader is the decisions you make will have direct consequences on your desk and compensation, and that is far less mundane than most jobs out there.
The trade analyst job is definitely less motivating for that reason- not really being the person that makes the decision and has an impact and more about reporting and catching mistakes. And its repetitive- same type of process every day. I think a lot of people get confused by the title- analysts at banks, funds, consultancies, etc have natural progression and move to different responsibilities over time (or are fired). In the context of commodities, “analyst” can be a permanent entry level job- hence the frustration that people feel. Just one thing to keep in mind for people considering this type of role.
You hit the nail on the head. Sounds like you're talking from experience haha
ive been in both environments in front office roles. tbh being an analyst at a bank and getting promoted is just a matter of time, getting acceptably along with your seniors and not being awful at your job. at a trade shop it’s different, you need to have a lot of grit and really show some PnL linkage or push to build some attributable PnL… enough for it to show that you are ready for the next step (call it a junior trader). and I don’t think anybody should steer away from it just because of the above. it’s the nature of the industry. each job has different caveats and they are made for different people. when hiring a junior physical trader i am looking for much more of a proactive and entrepreneurial person compared to my analysts when I worked at a BB, which can be more of a reactive type of profile as long as they are acceptably smart and have endurance. the successful phys trader (exceptuating high quanty commods like power) has a more unusual set of skills IMHO.
Truly I see some major issues here and do not think you are a good fit for physical commodities longterm and probably would prefer something like management consulting. I think the main issue is you are not used to building your own skillset independently and this is an area that makes ppl move from 2-3 year path to 5-7. Here is some thoughts.
First, “mundane tasks”. Trading in itself is mundane you come in and do the same thing everyday, most phys commodities infrastructure has been around for years and it is not like the job changes much . What makes it not “mundane” is the conditions of the market can change anyday and you need to be prepared and game plan for it.
Next, these tasks you consider mundane are all things that impact the “Desk Head” job at the end of day, see here I did not say jr trader or sr trader. Cause many traders like yourself find that stuff mundane over time but as a desk head they are crucial and when traders forget their mundane tasks you spend an entire weekend doing their work.
Let’s talk about the most mundane of mundane shit. “trade uploads” and “p&l reconciliation”. Every desk head through their career has prolly effd up many trade uploads and possibly cost the firm lots of money on settlement especially 10 years ago. Knowing how your back office works and how trades are uploaded to settlement is very important cause if a “tired desk analyst” or “orig” mess something up it could impact the exposures for your team and essentially your bonus end of the day. Many “Heads of Businesses” prolly spend 10%-20% of their time annually on how their back office works, technology to put in, how to reserve/release P&L etc…So what you consider “mundane” is also the work that your desk head/anyone-above considers most impressive for a young analyst. As well trade uploads are a great way to see what your team is doing, are they putting on the same trades everyday (closing a position desk head/management has created), are they shifting assets around, are they reacting to news, so on.
Anyways past the boring stuff you grouped “market analysis” and “hedge requirements ” as mundane as well. If you find these mundane you are going to find your first few years as a jr trader super frustrating as that is all the job is. So to grow as a jr trader you have to do your own market analysis/customer analysis at some point and then pass this work onto the “desk analyst” that is how you become a sr trader.
That all said many people do not fit the culture needed to do the stuff above to manage physical commodities over a longterm, this is why many firms like yours are a pyramid structure vs more flat like merchant/hf. That said you applied to a merchant and they said “where is your python skills” and you said but no one at my firm uses python. HF/merchants run super lean and they do not super complicated trades like your firm is doing, their p&l reconciliation is almost instant and their technology is first in class. So the other 80% of the time is spent purely on “market analysis” and “scenario shaping” where nowadays you are using tons of data and python is a requirement.
So really comes down to, if enjoy niche structures/contracts/assets understand it comes with a lottt of mundane work. If you enjoy more data analysis and financial risk most everyone now has coding/quant skills. If neither move to more a management consulting where work will always be assigned and its more project work vs doing the same thing day-in/day-out.
Hope that helps..
what a response
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