EU/UK Energy Trading Prospects
Besides the supermajors, what are some top firms including utilities companies that have a good energy trading desk (gas/power) in UK and EU?
And for the more experienced traders: any advices for a junior in softs with some quant background looking to move to energy and maybe doing intraday/prop there?
If you have some background already, going into one of the traders' "with experience" rotational programs (see Traf program for ex.) might be a good way to transition product w/out having to necessarily take a whole step down / pay cut / title cut / etc. Your quant work should help add some weight to your profile.
I don't know that I personally would want to be on a European utility's gas/power desk at the moment - from what I'm hearing, at least on the LNG side, many of these desks are getting clobbered so I imagine morale is not high which is aligned with the numerous departures / shop changes I've seen as of late, primarily in origination, trading and direct support seats like operations.
Who knows though, maybe a problem desk is actually the right opportunity?
Thank you. I have an impression (mainly gathered from this site actually) that it is hard to make trader from Traf grad program. But that said I went through the same path at my current firm so not really excited to restart the entire thing (possibly even longer this time in energy) to only have a chance at trading.
Very interested in your comment about European utilities' trading desk in current climate though. Didn't they all just make record profits in the first half year (Shell/Centrica in UK)? Is the "clobbering" because of the increasing financial burden a la collateral demands hitting these firms? Been seeing quite a number of them recently in the headlines with liquidity concerns eg. Centrica, Eurelectric, Uniper, etc.
Other than that, what are your views on the spot trading setup at these big utility firms? I suppose they're trading both paper intraday and physical overnight or longer; but are they any good? Is it worth a transition from early career in softs?
Some may disagree with me due to them having broke this mold themselves or witnessed it, but yes, generally speaking you're unlikely to make trader at a trading house via their programs/rotations. Vitol, Traf, etc. do a lot of their front office hiring externally, to the point it almost seems like they prefer it (don't take my word as gospel). But the benefit you get coming out of one of those programs is you'll be a desirable candidate and if the firm can't give you what you want, you can be confident in saying you'll have to part ways for better opps. elsewhere.
Using your examples of Shell and Centrica, indeed they did, I suppose my point is coming from a much more zoomed in perspective. As you know these shops are large, complex machines with many units and the headlines I read make it seem like its been a party for everyone internally - I've found this isn't necessarily the case. And the overhang beyond that point, as you alluded to, has been the constant threat RE liquidity concerns and margin calls from hedging activity. By virtue of the activity itself, some of the best hedged businesses were hit the hardest. I mean if you're at Total right now, you're basically looking down the barrel of becoming EDF - there's no way that sits well with many, and that's one example of multiple in Europe.
I'm not super confident in my view RE their spot trading strength as I only have visibility (a) from the outside (not at a utility), and (b) on one side of the transaction: them as buyers/receivers. From that perspective, and for lack of a better term, they come off "utilitarian" in their approach, which is probably exactly how it should be. Home asset needs energy to produce energy, source, buy and deliver energy to asset, sell asset's energy downstream. Where a Vitol or a Traf are digging in and employing second and third degree thinking and view-taking to find a penny or two here or there, a Uniper is scratching the surface of first degree. That said, make no mistake, some desks in those firms have killed it, especially the ones with dedicated, and bifurcated marketing & trading arms with preferential access/rights to company assets (like Shell).
That is some very very valuable insight man. I really appreciate it.
Now comes the boring question about comp: Is there a difference in pay (base + bonus) between commercial oriented trading houses (Traf/Vitol/Glen), utility companies (Centrica/Enel/EDF/Uniper), and supermajors (BP/Eni/Shell)? Any range you'd be at liberty to give?
And let's say RE gas trading alone, if given a choice coming from cash trading softs at a big agri trade house, where would you want or advise one to start?
I was a shifty for a util, i mean intraday is good, good wlb, but as a shifty you just trade around cost at util, so you are more of an operator than trader. That being said the pay isnt going to be the top of the class, so you ratter come in, move to curve in a year or two or you stay forever. Most of the major util make sure their shifty pays well, other than SSE and Drax i think. but it really is sorta step down if you already have a trader seat. and yes no body is having a party, Hedging collaterals caused massive bail outs as you saw on terminals, unless you have a solid offer now, id take a step back to consider as the winter has yet to come. And If there are lots of intraday shop is starting up in Europe but some of them are no where near being set up properly in prep for the storm, both financially and politically.
What do you mean by "shifty" and "curve"? I'm guessing here "shifty" is trader at a util but wondering what "moving to curve" means. And it sounds like there's a lot going on behind the scenes that outsiders like me are not privy about regarding the near/medium-term prospects in util energy trading.
I'm still very new to the trading seat at current firm. And from where I'm based, util may pay 25-30% more in base alone. In my mind that doesn't seem too bad as a start because it's also a clear chance to switch from cash ags to prop energy, which should have a higher ceiling eventually in total comp and tbh I hope is more numerical/quant in nature which is what I prefer.
Is that logic accurate? Or what else would you add or say differently?
Oh yea you defo gonna do better than 30% of your base even as a shifty. for shifty i meant intraday. as its most of the time run a 24/7 desk with a 24/7 market with a larger team. curve is more like trading the commodity futures. which is working in a typical market hour. no nights and no weekends
Why are you looking to move from softs to energies? Much harder to find a softs trader than an energy trader nowadays..
For comp reason mostly. Progression in softs seems (much) slower to me.
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