From research to oil trading?
Hi guys, I have been working at a research house for almost three years now, mainly doing fundamentals analysis (basically SnD modelling) and price forecasting for crude and refined products. The company is well-known in the market, so I frequently get DMs on LinkedIn about trading analyst positions.
And I am at a point that I feel I need to reconsider options for my career progression. The idea of trading is enticing to me. And from my conversations with headhunters, it seems like I am already doing most works that a trading analyst would do, apart from helping develop trade ideas. But to be honest, I actually have very limited knowledge in how physical or paper trading really works since I primarily focused on fundamentals.
So if any of you could give me some advices and answer the below questions, I would be very grateful.
If I want to break into trading, is the trading analyst-to-trader path still the norm?
How much coding knowledge is needed? In my current job I rarely use Python, as most of the models are built in spreadsheets. But I have come to realise that python is a common requirement. So what packages should I get familiar with? And what are the typical tasks done using Python for trading analysts?
I didn’t come from a refining background, so I am less confident on the products supply side modelling. I can’t say I understand the technical details about modelling refinery output, though I do know what goes in different units and what goes out, and the impact of slate on yields. Would this be enough? or the role actually requires a very decent understanding of refining process?
I know I might not be asking the right questions. So please feel free to share any thoughts you have.
Very common pathway to go from analyst to trader at less bureaucratic places (hedge funds, smaller companies, Vitol/Traf). Still possible at Bp/Shell type places though there are formal testing and rotational programs required.
Coding is a huge plus to be a good analyst, but not a requirement if you are just wanting to use the job to be a trader. Task to be done are things like- connect to a data source, update a model, kick off another model that depends on that model, recalculate fair values based on all of those updates. Advantage is that all that can happen in the background vs someone actively maintaining a spreadsheet.
Obviously better to know about refining than not but really depends on the job scope and seniority if that’s a requirement.
Thanks for the reply, much appreciated!
I think I got a rough idea on what areas of coding practices I need to pick up now.
From your username, I assume you must be a quant trader. Could you please share a bit about how a trading analyst is usually positioned within a trading team?
And how do you feel about working as an analyst/trader in general? Tough hours and stress?
A fundamentals analyst at a trading company will typically sit with a bench, and have the responsibility for covering a specific commodity in a specific region by updating research processes- typically a supply and demand balance. I haven’t worked at a consulting/research firm, but I believe the desk analyst job is likely to involve fewer hours since there are fewer “write a report because that’s required every week” and “do a presentation for client x then for client y then for client z” type tasks. The product you would be making would be judged on its own merits, and if you can do that efficiently without a ton of PR work you can definitely do that at most places.
You're well positioned to make this move, the work will be similar. This is a well trod path and you have the skills to be successful in these roles. Don't be overly concerned about perceived gaps in your knowledge, if you need to learn about refining on the job it can be done. Some coding competence is a plus, but a lot of quality work is still done in excel. Ideally you'll know enough that you're not updating numbers by hand in your SnD models.
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