Power -> Oil
Hey WSO
I got some great advice in previous threads, so I thought I'd consult the WSO oracle once again. Bit of context - I've been trading real time power at a utility for about a year now. Really love electricity and can see myself sticking around, but recently I've been interested in exploring other energy commodities.
I've been tossing my resume into the ring for oil and gas roles, and I'm currently interviewing for an oil trading analyst role at a Mercuria/Glencore/Trafi/Vitol. Feel like these sorts of moves are best done in the early career stage - before the golden handcuffs tighten too much and life shackles you down. Going back to an entry level salary would sting a bit (on ~100k AUD base at the moment, expecting a raise to ~150k in the next couple months). But I'm young and I'm willing to trade the immediate salary loss for a (hopefully) deeper understanding of the broader energy mix. Plus having a trading house on the resume would look good and might open up some opportunities overseas.
Obviously this is all hypothetical as I don't have the job yet, but what's your opinion? Career limiting move? Better off staying in power? Or have a crack at oil?
Would love to get your 2 cents on this.
Cheers!
I’ve been in both, and my personal preference is oil.
As a commodity, oil is murkier than power. It’s a global commodity so lots of factors link together, the factors themselves don’t have as precise cause-effect relationships compared to power, and there is not even a single commodity that they effect- but a huge spectrum of oil barrels that vary in price and quality. My view is that this makes it more interesting and you have more to learn.
On the actual job, it’s more of a circumstantial one for you- what is your track currently vs what you would be at the other place. There is not too much benefit to having experience in both- very few roles require depth in both- as they are not significantly linked most of the time. An oil trading analyst at a trade shop can be very vague- make sure you understand what you are getting into before hand. They could be using that title for a job in pnl reconciliation to exposure management to fundamental analysis. And trade shops are not known for allowing many analysts of any flavor to transition to traders.
Someone who has experienced both is exactly who I wanted to hear from, thank you for your input.
Honestly the "trader" title of my current role is a misnomer. It's 100% asset optimization. It's interesting and challenging but I definitely won't be doing this forever. If I were to stay in power, my long term goal would be to move out the futures curve and eventually run my own book - I know this isn't a given, but with a few years and a couple job hops I can see a path there. I think most of my desire to explore other commodities comes from curiosity - I just think it would be really interesting to learn a different product.
The job description lists out trade reconciliation, hedge management and position reporting as the main responsibilities. Sounds pretty operational with maybe some ad-hoc analysis tacked on. Good starting point for a prospective oil trader? Or one to avoid?
Thanks again for your input, it's much appreciated.
Most physical traders are going to asset optimize as well in any commodity and in oil that takes the form of optimizing refinery feedstocks, blending, shipments, or storage. But it’s also about finding assets to optimize as well, like signing deals with refineries, pipelines, tank owners, or producers. As trade shops don’t own many assets on their own, that is a crucial part of the business. Some run spec risk based on their market intel from those assets, or ideally, a combination or intel, fundamentals, and valuation.
Pure spec roles are not really that common outside of hedge funds, which take experienced market analysts and traders from the physical traders. I’ve never seen one “develop” commodities talent, maybe aside from Citadel that takes phds to become analysts, it’s more of a route for very experienced specialists.
The analyst role you are talking about, unfortunately does not usually translate into a trader role at these places. But life is always case dependent so you can ask about that particular role in that particular team.
Disregard, you’re international. Sorry amigo, don’t know much about anything in your neck of the woods.
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