How to break into energy/commodity trading?
I have experience at a fund of funds with a large allocation to commodities. Thus, I've had tons of exposure to traders, derivatives, trading strategies, and I've gotten to know most commodity markets on a fundamental level as well. I've also had many typical analyst-like duties like prepping client material, general research, etc. This isn't your typical fund of funds experience where I'm an analyst crunching out reports while the big wigs make all the decisions; its a small, flat organization and I have a lot of access to hedge fund portfolio managers.
I'm a good job candidate and interview pretty well, which is why I've been on the cusp of securing a position in energy trading multiple times. The interviewers are strongly tempted to want to train me (which is why I've gone through several rounds each time), but each time they decide to go with someone with more experience, even though my knowledge on oil, gas and refining is considerable (much is self-taught from reading).
I'm particularly interested in energy trading, or being an energy analyst on a trading desk. I am definitely missing some kind of intermediate job step that is precluding me from serious consideration. Many energy positions just require a very general level of experience in the oil & gas industry (i.e. "3 years in oil & gas industry", which I don't have). The big question is: what kind of position should I be looking for that is reasonable to attain? Is it:
A scheduler?
Some other ops position?
Should I bite the bullet and give up making close to 6 figures and take an internship?
These are some examples, but there are other options as well. If you could, please be specific about the exact kind of position that is probably what I'm looking for (e.g. if it's an ops job, please name a specific ops job).
Thanks !
I really need some clarity sometimes an outside perspective helps a bunch. It's also tough to switch strata in finance and transition to something new, so any advice would be much appreciated.
how long have you been working at the fund of funds?
a bit over 2 years - it's my first position out of college
the problem is that trading commodities physically is actually quite different than trading the financial products. if you want to be a market maker, that's one thing. but to be a commodities trader (like at BP/glencore/trafi), you generally need physical experience to succeed. these shops generally have a rotational role in ops, risk, mkt analysis, scheduling before you can become a trader
That's a good point. From my point of view. I would be very interested in either a financial trading (futures/options) role in energy, a lead up to a physical trading role or a market analysis role (building S&D's, forecasting, general research).
I've been applying to everything and seeing what sticks (gotten a few callbacks, although no offers). The physical trading route seems like the most time consuming route of the 3. The financial trading route seems like the hardest to break into at anything above the most junior of positions. The market analyst route seems the most likely at this point as I have a background in econometrics and I'm pretty familiar with the drivers of supply and demand for the major energy markets.
What in your experience is the most natural transition of the three from where I am?
Just to clarify - I am interested in anything within the realm of financial trading, physical trading or market analysis in energy products (just because I know that down the line I could transition to another of the three if I was so inclined, with some limits). As someone with relevant but tangential experience, what's the easiest breakthrough point? What is the best path to take?
I'm not familiar with recruiting at these firms beyond the graduate rotation program level. I suppose the easiest to get into would be a market analyst, but it all depends.
Hi there,
My university has precisely 0.001% representation in the energy industry and I have zero background in energy, but I interned on an energy trading floor and have now accepted an offer in a trading program at a commodity house. The biggest challenge you're going to face is the same one I did -- you're not currently in the recruiting pipeline that exists at most majors, commodity firms, and banks. This means that you need to build your network and go find opportunities to break into the industry. You have some experience in and exposure to energy so you have that going for you. Good luck.
Look for a scheduler/analyst job somewhere you can get your feet wet trading physical. You can learn the ropes of the physical market and then look to leverage your FoF and econometrics experience/education into a better role. You need the foundation before you can move up and it will probably feel like a step back from where you are now but what you learn is important if you want to move up. Also, some hands on with physical crude markets/pricing/movement is probably what you're missing when you're getting passed up for job offers. I have not found a book that contains much practical info on crude trading (Oil 101 is good but far from complete). Sounds like you're on the right track with getting interviews and networking. Be persistent, be hungry and be humble and you'll get picked up.
Do all "scheduler" jobs relating to power (for example natural gas scheduler) require you to be on-call and work a 24/7 schedule? Or, is there a specific niche in power that has a scheduler job that would not require me to be on-call 24/7
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