Physical Trading: Crude vs LPG

For the pros out there. What is your take on crude marketing / trading vs LPG marketing / trading? What would you say is the future of both and which one has more growth potential. What is the relative attractiveness and is one more lucrative than the next (and if so, is the gap expected to narrow?). Long story short, is LPG a good place or should you hold out for crude? Curious to hear from both sides
Thanks!

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Comments (8)

May 19, 2015 - 8:40pm

Not an "expert" by my own standards but based on what you're saying and my assumption (that you have an LPG offer), I'd take that and run with it. Hopefully someone else can chime in and expand but it is also my inference that you can find many opportunities to move to crude from LPG down the line, especially from an operations standpoint.

May 31, 2015 - 4:34pm

Does the LPG shop do anything else? Condensate or Butane? If not, might be a little slow and steady. Crude is a little more dynamic but ultimately it depends on the shop. The culture and risk/reward structure are going to change more on shop than by commodity.

Jun 3, 2015 - 3:47pm

I'm currently interning on an LPG desk at a supermajor oil & gas firm. We trade ethane, propane, butane, isobutane, and natural gasoline. From what I've seen - LPG is the new "frontier" as far as energy trading goes with demand expected to boom around 2018-2020.

A lot of the commodity houses have been poaching traders from the o&g firms (like mine) in order to build LPG desks of their own with the expectation in mind that the business is likely to experience a boom in the coming years. The desk I work on is slightly smaller than the LNG desk and a hell of a lot smaller than the natty gas desk but it's growing in both size and importance especially in terms of P&L and daily traded volumes - historically, this desk was focused on optimization of our firms assets and making sure our products were flowing but as the market has grown more and more opportunities to make prop profits are appearing. It's very different from crude though so its hard to compare the two.

On one had you have crude which is a very old and established desk and for the most part is pretty played out with less prospects of massive growth in the future and on the opposite end of the spectrum lies LPG which is new, growing, and has a much much smaller market with a lot less volume but the potential is huge and as a result the o&g companies as well as the commodity houses are taking notice.

Edit: Forgot to mention - currently - LPG is the same in terms of pay when compared with crude at the o&g firms. In regards to the commodity houses however - LPG traders are being hired at a notable premium due to the very small number of people who specialize in this market and the fact that demand to build LPG desks is strong and continuing to grow at a rapid pace.

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Jun 26, 2015 - 11:05am

Thanks all, these are good responses. Here's another question. How would you stack up strategy roles (BD) vs marketing/trading roles. Now I know most people will probably say marketing, but here is where it gets interesting. What if BD actually pays more, at least in the medium term, because of where the opportunities are. NGL BD would be with a fast growing company, NGL marketing would be a by product that needs to move from the current company. BD gives you more upside and faster growth, marketing gives you really good exit opps and bonus potential down the road.

I think it probably comes down to preference. I always thought marketing would net you more in the longer term but I'm increasingly seeing some marketing people head into those strategy roles as they compete for some of the executive / top spots at their respective companies.

Jul 16, 2018 - 11:02am

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Email: [email protected]
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