Energy Trading Internship Prep

I have a trading internship for a large energy shop lined up this summer and I want to make the most of it to get that coveted full time offer. What should I be doing to prep for said internship (other than just learning about the industry online)? Any specific books or materials I should start reading? I am not 100% sure what the exact format will be, but it will be at least partially rotational (scheduling, data analysis, etc.), and will be primarily oil & gas, possibly a bit of LNG. Also, on another not, how common is it for these big energy firms to give FT offers to rising juniors. I know most offers come to those entering their final year of undergrad, but I'd love to go into the second half of college with a solid job lined up, and the potential to go into senior year with 2 standing offers. Thanks in advance for the advice.

Comments (18)

Jan 2, 2022 - 3:17pm

Your primary job as an intern will be to have a good relationship with the people you work with and to ask good questions. While reading books and articles can give you a base level of knowledge which will help you out, it won't compensate for being unpleasant to work with or being bad under pressure.

I would get ready for the possibility that you work on really boring work for the summer. 99% of the time interns either clean up some data sets, do some rote accounting or data entry work, or best case you get to do a research project on something interesting. Your shop and your role might not be as boring, but it's better not to come in with sky high expectations.

You will 99% not get a full-time position after your sophomore summer because that's not how full-time hiring works at any place I'm aware of. That being said, if everyone likes you it should be easy enough to get a second internship at the same shop and that could put you in a better position to get a full-time. It's all going to depend on what the outlook and company need is when the hiring decision is made.

Oil 101 by Morgan Downey

It reads like a textbook and can be a little outdated in places, but this is about as close to a crash course on the physical oil supply chain as you can get. You might not understand everything the first time through, but one read will probably be enough to go back and reference it later. If you can't read any other book, read this one.

Petroleum Refining in Nontechnical Language by William Leffler

Great book to understand the refining process. Pretty basic language but might help if you've taken a college chemistry course. A lot of the time in the physical trading world the ideal physical position reflects the input and output capabilities of your assets so having some extra background knowledge can help. 

News Resources

If you can get access to the Platts or Argus websites, those are very helpful for current market news so that when you talk to a trader you sound like you know what's going on. Main goal here is to learn some of the market jargon that traders and schedulers use daily.

Follow relevant energy news from websites you have access to. I recommend Reuters and Bloomberg, but WSJ isn't awful. The Platts and Argus podcasts are publicly available tend to be 15-20 minutes and full of decent enough info although sound quality is clearly not a priority.

One last thing: if you don't know how to program, learn to program (Python preferred). It might not be an immediate payoff, but I guarantee there will be people in your company who have been around so long that they have lost all touch with technology. The Colonial hack last year showed that most of the industry runs on old tech that is sorely in need of updating. If you have even basic first semester CS skills, you will be ahead of the curve.

Jan 2, 2022 - 3:24pm

Thanks for the tips. I do get that most of it is relationships, but I want to walk in with some solid technical knowledge. As far as CS goes I will have 2 classes under my belt. Do you think I should add another? I'll check out those books/sites and thanks again.

Jan 3, 2022 - 9:45am

this is great advice... i would def ask to read platts daily and find 1-2 things you dont understand and learn them.. bring good questions and be respectful of peoples time.... i love to help out interns but know I had a job to do as well....   it may sound simple but a trade desk likes good hands...   just be a good person and work hard.. you will do fine 

Jan 3, 2022 - 3:49pm

Thank you. I really appreciate everyones help. My biggest takeaways thus far are work hard and bring GOOD questions to traders/schedulers. As far as general info I've started Oil 101 and reading platts daily. Great tip on focusing on 1-2 things I don't understand and learning about them.

Jan 3, 2022 - 1:48pm

Other posters have had good advice. To add, I would read stuff like these links below and research ANYTHING in there that you don't understand. I am not saying that the dated Brent market will be relevant at all to what you will be exposed to in your internship (or maybe it will, idk) but learning things discussed in the paper will provide a good place to start your research and give you a better idea of industry lingo and how deals are actually put together. Once you intimately understand the supply chain and how trades are priced you can start to understand how different market moves will impact your position (P&L). If you understand the physical supply chain, how deals are priced, and your financial risk from those deals you are on your way to becoming a trader.   For example, what is the difference in FOB and CIF? What is Midland WTI and how does the benchmark priced published each day actually get calculated? What are quality adjustments? How would adding Midland WTI to the Brent benchmark impact the market? Why are loading dates important for a commodity? You agree to deliver X bbls in March and the customer wants to roll that delivery to April.. do you agree to it? Things like that and much, much more should be cleared up by reading the links below.

This one even gives specific examples on how different contracts price:

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/03/WPM40-AnA…

https://www.spglobal.com/platts/PlattsContent/_assets/_files/en/our-met…

https://www.oxfordenergy.org/wpcms/wp-content/uploads/2019/06/Contracts…

https://www.argusmedia.com/en/methodology/key-prices/argus-wti-midland

This one is really interesting starting around page 7:

https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-met…

Jan 3, 2022 - 3:52pm

Thank you. I will check these out. Generally it has been made clear through comments that I need to research things I don't understand on my own, and not bother traders with dumb questions, but rather ask great questions.

Jan 3, 2022 - 4:43pm

I would agree. Research everything on your own first and only ask questions about the stuff that you couldn't find an answer to. When you do bring it up your questions should be complex enough that it is obvious you couldn't find the answer online.

Most Helpful
Jan 3, 2022 - 4:15pm

Some great advice here but also some major overkill. To be clear you are working in a firm that is based on "physical experts and relationships". This is not a bank/fund heck not even trading merchant this is an extremely hierarchical firm that is evaluating not just a trading fit but also a "corporate employee fit" this is one of the few areas of trading where HR/backoffice etc have as much as say as desk head.

When I did an internship many many moons ago. Day1 desk head said never wear a tie again and here read this "50 page PIRA (yes PIRA ha) update on our commodity". Then over next few weeks here is XYZ banks research read it. 
Truly this job is all just "Econ 101" if you can master your econ 101 textbook and truly love that shit. As mentioned if you can program and make people's lives easier. But anything beyond that just enjoy the time and be ready to work. Truly in a firm like this you could rub a lot people the wrong way if you read all those books coming in and day1 are so super loud "oh i read xyz book." You need to come in humble and act like a total idiot, ohh "mr risk guy yes I should read oil 101", "oh yes ops dude explain to me what platts is plz and how you communicate to them". In firms like this sometimes "ignorance is bliss" and the more people across the board you have on your side the more likely your desk head boss will be given leeway to keep you around.

Return internship offers are common and then an easy path for the new grad program. But if you piss off some support functions cause you hot shot intern HR will not even find the budget to bring you back.

Jan 3, 2022 - 4:36pm

Saying all of this is overkill is essentially saying an intern should bury their head in the sand until the internship. The real advice though would be to read all of the stuff linked here and then act like they have never seen it before when they show up on day one. Be a pool shark.. prepare as much as possible but sandbag it when it fits the situation or use it to your advantage when you need it to appear like you're catching on quick. I would be pretty impressed with an intern that rolls in day 1 acting like they have very limited exposure to everything going on but then by week 3 they are asking detailed questions about how the structure of the curve might impact a trade I have on.

Jan 3, 2022 - 5:27pm

This is probably some of the best internship advice I've ever received. I had planned to not walk in cocky/act like I knew everything (which is probably a general good rule of life) but never thought to make it look like I got the hang of things super quickly. Thank you.

Jan 7, 2022 - 7:41am

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