Physical commodities trading house - natural gas analyst role - is this a good opportunity?

Did numerical / logical tests, phone interview, simple Excel exercise and an interview in CH.

Initially the role looked interesting -- use Excel and MATLAB to find arbitrage opportunities in physical gas trading. However, having received the contract it looks quite "back-office operations like" with data analysis barely mentioned. Mostly: monitor physical positions, do scheduling with system operators, demand forecasting, manage counterparties, process standardisation to minimise operational risk, some execution of bookings and data gathering. Is this a back office / dead-end role?

The salary is 81,000 CHF with a 0-3 bonus multiplier; the company was unwilling to comment on the possible bonus multiplier and asked to focus on the base.

Long term I would like to see myself in a quanty / trading role.

Comments (24)

Dec 18, 2014

This does not seem even remotely back office.

Dec 18, 2014

Hi TXEcon, thank you for replying; could you elaborate on your answer? Assuming a zero bonus multiplier 81k CHF is a salary of a fresh Computer Science graduate in CH. The latest communication from the company certainly indicates that at least half of the role would be in "operations". Unless in physical commodities trading "operations" carries a different connotation. I would not be "trading".

The responsibilities seem quite "admin" like and I am concerned what my exit-opps would be.

Dec 18, 2014

I don't know how much you know about commodity operations, but you should probably take that job. And yes, don't worry about the bonus for now.

People trading natty without some kind of experience along those lines are few and far in between.

Dec 19, 2014

My commentary is limited to my own experience, but do not class operations in physical trading within the same class as operations at a bank. The schedulers at my shop are very much at the front end of the business and directly effect PnL. Granted, I work on a desk with a blended product so things may be perceived differently for gas. As for comp, I don't know the going rate in Switzerland for an analyst type role, but that seems fairly generous for the city I'm in (extremely low cost of living though) and a 0-3 bonus multiplier is very enticing. Comp aside, sounds like a cool role that will lead places.

Dec 20, 2014

One of the things I am currently trying to work out is how this role fits into the bigger picture. You mentioned the role "leading to places". Where do you thing the role might lead? I know that some of the posters have already alluded to it leading to a trading role in the physical commodities. I am assuming that a number of physical trading companies in the LNG sector is finite; would the skills be transferable to futures trading / other commodities / banking?

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Dec 19, 2014
A.L.Verminburger:

Did numerical / logical tests, phone interview, simple Excel exercise and an interview in CH.

Initially the role looked interesting -- use Excel and MATLAB to find arbitrage opportunities in physical gas trading. However, having received the contract it looks quite "back-office operations like" with data analysis barely mentioned. Mostly: monitor physical positions, do scheduling with system operators, demand forecasting, manage counterparties, process standardisation to minimise operational risk, some execution of bookings and data gathering. Is this a back office / dead-end role?

The salary is 81,000 CHF with a 0-3 bonus multiplier; the company was unwilling to comment on the possible bonus multiplier and asked to focus on the base.

Long term I would like to see myself in a quanty / trading role.

The majority of the position description is what my current junior trader is doing for me. This is not a back-office role. Take the job, take the time to learn how the market works, and don't ask about the bonus again. You'll be fine.

Dec 19, 2014

energy trading almost always requires you to learn the ropes in a more junior role...physical trading in general is very demanding of knowing such details...you can't really think of it and career progression in it in the same way as like trading paper...really very different businesses.

Dec 19, 2014

And yes, if this is your first foray into physical anything, you should take it and thank your lucky stars you don't have to start at a far lower level with far less comp for that valuable experience.

Dec 20, 2014

Sounds like a junior trader role to me--I'd take it.

Dec 22, 2014

This is a front office role as you'll have to enter trades and schedule them. Middle and back office can only amend deals that occurred in the past. It is done this way for rather obvious reasons (Letting a trader/scheduler modify the price of a deal after the fact would open the doors to serious Enron-ness on the trade floor).

Your actions will also affect P/L, albeit only negatively as the trader will be the only one able to take risk/have access to a trading platform.

Opportunities after this role would be working in research (aka be an expert on a specific market), transfer to risk management or move to a trading role.

Dec 22, 2014

Thank you for replying 16rl. That's good news. I come from an engineering background an am quite big on maths and computation (albeit my skills haven't developed since graduation) -- can I still do something quanty after a role like that, can I use this experience to my unique advantage -- quant energy trading? Will I be limited to physical trading afterwards or will I still be able to move into futures trading as well (I think Harbinger904 said these are very different beasts). Also, is there any chance to get some data points on what the salary progression in physical trading might be in 1, 3, 6, 9 years? My data so far for (base + bonus) is: (0 yrs; 37,000 GBP / 58,000 USD); (2 yrs; 50,000 GBP/ 78,000 USD). I have adjusted the current salary for the high cost of living.

Dec 28, 2014

I am in the field of electricity trading; we have plenty of people with a physics/engineering background doing analysis, valuation and trading. Concerning your specific product (LNG) I could not give you an answer as it's a very different animal from power, but I bet there is also a need for quant geeks as well. Acurately forcasting demand trends & supply contrainsts is quite math intensive so you are quite likely to be challenged in that field.

To my eyes, your cost of living salary looks to be within range for a starting role. Switzerland is expensive but plenty of goodies come with it (Ski in the winter & Italy/south of France for the rest of the year being a big part of it)

Dec 29, 2014

One of my friends who is a head physical natgas trader at a firm that shall remain nameless once told me that anyone who trades the physical markets and knows them inside out can move to paper whenever he wants and moreover will probably do better at it than those who don't have physical experience, the reverse is almost never true.

Re: comp -- salaries vary widely depending on position. I've seen schedulers make anywhere form $50k a year USD to well over $100k (but those are career schedulers with loads of exp). Traders' comp is much more closely guarded,and there are some firms where natgas traders may not be making much over 6 figures, then there are those who clear well over 7 (who ofc have a lot of experience and are in a great position at a solid player etc.). The idea that there is a direct salary progression in the physical trading world is kind of a misnomer once you actually break into trading. Some firms pay a lot more than others though.

Jan 2, 2015

I would avoid LNG

Jan 3, 2015

Interesting. Why do you say that? I've been told that by a few other people, at least for a U.S. job...

Jan 4, 2015

Sorry, it is my blunder. I assumed LNG ~ "natural gas in pipelines". I am talking about pipelines (there is some compression in them from what I understand, but probably not enough to liquefy the gas) -- not tankers with frozen gas.

Jan 13, 2015

"natural gas in pipelines" sounds like regular gas trading to me...

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Jan 2, 2015

I would avoid LNG

Feb 18, 2015

Why do you say that?

Feb 18, 2015

Why do you say that?

Feb 21, 2015

Monty probably says that because it's a rather small (but developing) market...

Jan 3, 2015

As the power trading dude mentioned, lots of math in power trading, congestion and FTRs and so on.

Zero math in physical crude and LNG trading. It is all about options and connections. Not transparent and soft skills are the most important things, heck a good lawyer more important than other things. LNG trading has to do with massive vessels and long-term contracts where you find ways to optimize in the short-term not sure why you would think there would any math involved.

Jan 4, 2015
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Feb 6, 2015