Working into a Jr Trading role from scheduling...hoping for some advice.

I am in my 3rd year of scheduling at a small oil and gas shop. I'll try to keep as vague as possible given the uniqueness of my situation, but we are a smallish independent marketer. We don't have a natural long or short position. Our physical assets are fairly limited to transportation vessels, and a lot of what we do are producer services. So, it isn't quite as simple as trading where you have to cover crude inputs into your refinery, or sell gas to system operators out of your plants.

My time scheduling here has been rewarding. I think I already have a pretty workable understanding of the logistics of my certain product. Around Jan or Feb, they told me the plan was that I would be moving into a trading role. However, two major things have happened since then: 1) Covid, and the associated oil price collapse, and 2) The senior trader that strongly vouched for me left for a *top * job at a super major. I do get on well with the other traders here, but not in the same way

Right now, I am not really sure how to navigate it. There's been little mention of an accelerated role at my company. Admittedly, the director that manages our supply & marketing has bigger fish to fry right now.

I'm having difficulty to see how I can graduate out of my pure logistics role, to do some more commercially related stuff. The struggle is that all of the traders are all very established and already have long-running connections with all of our potential counterparts. Furthermore, in my scheduling job, I feel like I'm stuck on my desk, not really learning how to do the PnL side of the business. Whether it's going to conferences like CERA week (I know, Covid), or having brokerage accounts, or being in the trading meetings, I don't feel like I really have the backing to build a book either.

I totally get that 1) It's basically the worst time ever, and I should be lucky to have a steady, well-paying gig and 2) I'm

 
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Is this to say the other guys are trading purely spec books on their view alone?

This seems somewhat inconsistent with the idea of it being a small a marketing shop. It seems more likely they have a business they're trading around. As far as relationships go, the value is in the information you can exchange and having someone you think is sharp to talk the market with. Unless you're in some illiquid niche where you literally have to know the guy to sell to them, price, spec, and timing are why people trade, not because the other guy is cool.

I would seek to understand how exactly the books make money. If it's all spec driven, the relationships don't matter beyond intelligence gathering. When I think about it, I actually love getting matched on deals with people who I think are stupid assholes on spec trades because it gives me confidence. Beyond that, when you call it right, it's nice to know that you ran them over.

If it's not spec driven (which I suspect it's not), they're probably helping someone optimize. The relationship here is a little more valuable but ultimately you're doing something they need to do anyways but more cheaply. The relationship is valuable in that if you go out of business, they have to go back to doing it the more expensive way, but ultimately if you make/save them some PnL for a year or two and then realize you're actually losing money and get fired, they're not going to pay you back all the PnL because y'all go fishing together. Best case scenario you're actually making money doing this and it's mutually profitable. If they want you to "build" a book, this is probably what they want you to do. I'd advise talking to the guys you trust and seeing if there are any other opportunities they don't have time for, put together econs on it, and just kind of start managing it.

If you can give more color about the shop it's always helpful as these situations are highly personalized. Generic advice based on guesses (eg everything I wrote above) normally misses the most important points, but hope this is somewhat helpful. Happy to add more if you can give more information.

 

Sincerely, thank you very much for the thoughtful reply!

It is in refined products. Basically, the 'trading' would entail procuring supply from a major energy company or refinery, and selling to other major energy companies, or to smaller retail level users, etc. I think our unique selling proposition is owning a fleet of trucks, terminals, and storage capacity...there are many shops like ours. So it's not trading in the purest sense like taking a spec position on a barge. There is a lot of golfing and fishing.

I feel like the best way to establish myself is to try to prospect for customers a little bit off the beaten path.

 

In my experience, it normally takes 5-7 years to become a trader. Therefore, I wouldn't worry as you're still young being 3 years in. Only rockstars do it in 3 years.

I don't know what advice to give, but I can share what I've seen work. Getting close to the idea generation process, this could be providing fundamental analysis, being a trade analyst, or bringing market information from connections. Then a common step in the door is covering for a trader while they're on vacation.

Also, if your company mentioned putting you on a trading path you should bring it up again once things die down.

 

Thank you very much!

Yes, when the senior trader went on vacation, they actually got me to do some coverage work for them. I've also got to help out building a few models for the team.

Unfortunately, with said trader leaving, I feel like I'm left in a bit of a void. But it's totally understandable given everything going on in the world...

 

Physical oil trader myself. Stay the course as mentioned by others. Continue to exceed expectations on your scheduling duties and then ask the traders (make sure your boss is ok prior) if there is any analytical work that you could take on that they'd like to see. This will help you learn the business and gain the trust of the traders. Don't panic though if you were told a trading role is coming it'll come just stay positive and focused and don't worry about a mentor (trader) leaving as now it gives you an opportunity to prove yourself to the other traders. At the end of the day if you can handle the work you'll get the job. Good Luck!

 

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