Need advice - Energy Trading

Like the title implies I could use some advice. Just wrapping up my internship at a major in crude trading market analysis. I'm a rising junior, so have another summer to complete an internship. I didn't network as much as I should've to be honest, though the connections I did make were deep. I spent most of my summer coding a tool to compare SnD's. I'm worried that I'm pigeon-holing myself by having a math/comp sci aspect to my degree. I believe I could get a return offer at the same shop, but I would prefer natty (which might be difficult at current shop as all connections are in crude). Obviously I am casting a wide net and applying everywhere, but where should I focus my energy? Prop shops or a major with a well/regarded GDP/TDP? I want maximum exposure to trading/traders (current group seated as far from traders as possible - inefficient I know). Any advice is appreciated.

Comments (32)

Jul 27, 2022 - 12:31pm
EnergyHOU, what's your opinion? Comment below:

Spending your first few years in a TDP / GDP / Rotational program at a major is never a bad call IMO. You speak of not wanting to pigeon-hole yourself, one of those programs is a sure way of tacking on 2-3 years of early post-Uni experience without getting trapped into anything, even as broadly as at the product-level (a la, rotational in crude, and then ending up moving to gas). Those programs, particularly at BP (whether rightly or wrongly) tend to provide great opps. both internally afterwards or if you want to chase a mandate at another shop.

I have no bias here, I didn't go through one of these structured programs back when I first got into energy trading - but I have gotten to know a handful that did

  • Intern in S&T - Comm
Jul 27, 2022 - 12:37pm

Thanks for the advice.Might be a dumb question, but would it be wise to aim for a major (a la BP) that does a GDP/TDP in trading straight out of undergrad? Or would it be worth it to work in the industry for 2 years then go through one? For instance, I know Shell does separate GDPs and TDPs, but BP only does the GDP and it falls under trading.

Jul 27, 2022 - 12:46pm
EnergyHOU, what's your opinion? Comment below:

No dumb questions.

I don't believe in there being 1 true way that's > others. You could go into a program right out of Uni for 2-3 years, you could do 2-3 years of a specific role and then go into one, or you could do neither of the above and just spend your time in one or multiple roles at one shop building experience that way. In the end it'll be a hell of a lot more about your investment in yourself during that period and how you spend your time and build/nurture your relationships, then the structure of the program itself, or the path you take. The only real mistake you could make is trying to job hop your way into your desired seat/role, I have yet to see that pay out for anyone.

Jul 27, 2022 - 5:43pm
marcellus_wallace, what's your opinion? Comment below:

Well it depends do you really like coding/quant side of things. Or just enjoy working in energy products.

If its quant side and have the grades, your goal should be trying to get into a place like Citadel.

If its more phys side, GDP programs mainly look at grades and strength of resume so getting the best job with most exposure is helpful. They do not hold anything against quant backgrounds.

Truly apply everywhere and try to take the best job.

BP GDP is miles above anyone else.

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  • Intern in S&T - Comm
Jul 27, 2022 - 6:20pm

Grades aren't good enough for Citadel. 3.5s gpa, top 50 school. D1 student athlete and this internship at a major. How would networking work at somewhere like BP? Cast a wide net or really develop relationships already there? Does networking even matter as much for trading?

Jul 28, 2022 - 9:26am
ASUgrad2017, what's your opinion? Comment below:

Houston BP TDP for natty >>>

Jul 28, 2022 - 4:26pm
WinnerWinner, what's your opinion? Comment below:

As an intern you are going to get whatever seat is open on the floor so not much you can do about that. Trading programs are good but also look at smaller energy trading companies along with the majors for scheduling/operations jobs. You should have some interaction with the traders in that sort of role and will get to see a bit more of how the businesses operate there. Your coding skills should allow you to stand out from the other schedulers too.

  • Analyst 2 in HF - RelVal
Jul 30, 2022 - 10:09am

In general, I'm just curious how energy trading compares there vs. other funds/physical shops that trade paper. 

For two sigma, if you look at job postings they have from time to time, it's evident they're looking for commodities-focused individuals. Brent, WTI, and Henry Hub are some of your most liquid instruments so I assumed they're at least participating in that space. 

Boiling it down, if Two Sigma/JS trade energy commodities, are their strategies: 1. part of a broader macro portfolio, 2. quantitative and systematic where they trade cross-commodities, 3. very fundamental and S&D focused, 4. something else? 

Any context would be great. 

Most Helpful
Jul 30, 2022 - 11:53am
marcellus_wallace, what's your opinion? Comment below:

Will try my best…

To begin when speaking about strictly financial energy trading (which I do), margin/capital usage and access to capital is very key. Many trade structures physical shops look at and like would never work in a pure financial world. But likewise this opens to a lot of "spillage" where someone with easy access to capital can capture.

Now…the firm that is largest in the space is Optiver, they make markets in very liquid products such as WTI/Henry. The markets they make are exotics where they very likely have a math edge, such CSOs/vol spreads for example. Two Sigma would be along the same lines, as they have a capital edge and math edge in any exotic product they do. 

Next, we have PIMCO which manages a commodities index and truly tries to manage vol structures across the largest more liquid commodities. PIMCO has few times considered moving into products beyond just Henry/WTI but usually learns they cannot model anything that does not offer billions of liquidity.

Next, we have DE Shaw which is probably the one that leans most to Citadel. DE Shaw thinks if you are a large market maker in volatility you win at the end (casino always wins) but they at least respect maybe more than an Optiver that Energy can be beta negative. What does that mean, quick example Europe can have the worst recession known to man yet TTF is the most bullish thing on earth, weather/geopolitics can overwhelm.

JS, okay so JS treats energy the same as any other product, if we have an alpha edge/low-capital-cost/liquidity have at it. JS like any prop firm doesnt care if an FTR guy makes $3mm annually as long as edge there, if you made $3mm at citadel dont show up for work. At JS just do your thing and have access to capital.

Jump/Squarepoint, both looking to expand both need strong systematic traders but also want to understand fundamentals behind things. Not fully sure what either one style is yet.

Anyways there is some examples of large macro/hft guys in energy as I said each firm looks things differently. Economies of scale is key to some, alpha-edge to others. Key theme is they all have access to capital very quickly way faster than any phys shop would ever.

  • Intern in S&T - Comm
Aug 1, 2022 - 7:06pm

really? I would've thought it was the other way around. I'm really open to all opportunities but given the choice id prefer g/p.

  • Intern in S&T - Comm
Aug 1, 2022 - 7:07pm

I'd 100% prefer g/p, but really just looking to get my foot in the door via an eventual gdp/tdp.

Aug 4, 2022 - 4:28pm
ArKhAiK, what's your opinion? Comment below:

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Aug 4, 2022 - 8:52pm
marcellus_wallace, what's your opinion? Comment below:

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