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I'll bite - this an interesting discussion that can be debated.

On quality - no comment, you're right there is nothing to be had here. No grades, types, etc. and any differing quality specifications in LNG get normalized during invoicing as required.

Structure. LNG today (in its absolute infancy) trades across countless pricing mechanisms and formats - I've seen everything from vanilla Brent or HH link, to multi commodity linked formulas involving urea pricing or other products that feed into commodity processes. Assuming LNG gets priced at liquefaction economics and call it a day is naive and 2011-esque

Logistics. I'm curious, what differs in crude oil logistics versus LNG - I'm not in crude or know too much about it, so I'd be interested in hearing more.

Geopolitics. Anything that could geopolitically affect global crude oil benchmarks could do the same exact thing in the global NG trade. Russian pipeline flows affect European LNG. Tariffs between Mexico / Canada affect HH and in turn gulf coast FOB LNG. Etc. Plenty of equivalent examples that drive huge swings in indices used in LNG pricing structures.

 
StdntTrader:
Assuming your ranking is in descending order, I would love to know why your view on LNG is so diametrically opposed to @EnergyHOU; there's a lot of hype right now around NG/LNG, I would love to hear the bear case from an industry vet.

there has been HYPE since 2010... LNG will come into play in a major way - but when?

i am 36 and LNG was the new new thing when i was coming out of school - still not a game changer

 

Non-commodities - anything that trades in relatively illiquid, brokered markets for job safety + room for alpha

Above commods - LPG. Markets in the US are very fragmented due to regulation, which leads to volatility and more opportunity to make a name for yourself on a desk. When I was on a commods floor the LPG/light end guys always looked like they were having the most fun

 
hoornsup06:
Non-commodities - anything that trades in relatively illiquid, brokered markets for job safety + room for alpha

Above commods - LPG. Markets in the US are very fragmented due to regulation, which leads to volatility and more opportunity to make a name for yourself on a desk. When I was on a commods floor the LPG/light end guys always looked like they were having the most fun

they still are

 

Crude is king. You’ll make the most money as a crude trader if you’re good cause the dollar size of all the deals is much bigger. Caveat - if you work for a oil major as a crude trader, unless it’s BP, most of what you’ll be doing is supply trading. Which is either A) Get rid of the barrel or B) Find me this exact barrel. With given price targets. So not as fun. But still lucrative.

Middle distillates is Fungible - with some room for optimization but there is global arbitrage opportunities so that makes it a bit more fun than crude, less direction around how to trade it from the helicopter parent company.

Light Distillates are dogs, in today’s market no one wants Naphtha or Gasoline so it’s a wave of people trying to optimize it. Low margins means unless you’re at a trade shop (Vito’s/Trafi/Gunvor/Freepoint) - you’ll have the smallest book in the company. Which means smaller bonuses.

LNG/LPG/NGL - very interesting. In today’s world it’s all about building natural gas infrastructure and signing long term deals. You’ve got fractured markets and it’s really very “corporate” right now. So the guys who win are the guys with weak transfer prices and the best new docks/fracs etc. very much in its infancy and not really sure where it wants to go. If you live in Houston - this is where you’ll find all the job openings. Otherwise you’re very limited on where you can work.

 

I'm in proprietary power trading. The lack of demand elasticity gives some interesting price distributions: good for trading. There are also lots of opportunities to run different strategies: cross-commodity (most markets have both coal and gas installed capacity), locational strategies for interconnected markets (you don't need to own capacity for this), pure power fundamentals via fuel spreads (power price - fuel cost - carbon cost).

The volume of data (half hourly settlement in my market) also gives you plenty of opportunity to work on new analysis!

 

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