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Oil traders on the skids?

One minute it’s up, one minute it’s down, but fluctuations in the price of oil should be good news for oil trading jobs. Last week, energy exchanges NYMEX and ICE reported rising reported healthy increases in profits on the back of rising oil trading volumes following peaking prices and (in the case of ICE) ‘the entry of new participants in all markets.’

Anyone might think those new participants equate with new jobs, but recruiters in London say this isn’t the case. Mizuho announced plans to open a new commodities trading operation last month, but other sizeable new entrants are thin on the ground.

“Banks like Merrill, Citigroup and Deutsche are hiring in commodities – including oil,” says one. “But they’re holding out until they find the best people.”

‘Banks really aren’t driving the hiring right now – it’s more down to commodities trading houses, funds and oil majors,” says Jakob Bloch, managing director of recruiters Commodity Appointments. “On the whole, in the oil space there hasn’t been a particularly buoyant hiring market of late.”

Part of the problem appears to be that top talent is locked in. “A lot of people hired recently were on two year guarantees,” says Elliot Pickering, an oil specialist at search firm Human Capital. “There’s now a big difference between what people want and what’s on the table.”

There’s also the threat of increased regulation from the US, with Congress threatening to impose limits on oil-related ‘speculation.’

An analyst at one US house in London says this could make life very difficult for oil traders at US banks: “How do you differentiate between trading and speculation? This could become a bureaucratic nightmare.”

If Congressional threats come to pass, he says oil traders at US banks will be better off moving to European firms, or failing that, another commodity class.

Comments (3)

  1. Trading oil is a slick operation! If viewed on long-term charts, there’s serious money to be made. This up-down thingy is too dangerous, especially with what’s going on in Georgia and places like the middle East.

  2. Well if you are talking about physical oil, then you talking rubbish. Short term contracts are the only way to trade. You cant leave a cargo sitting in port for 2 years as an investment. Meanwhile your hedging facility will be down the pan as you have to meet massive margin calls. Few people understand that physical traders are under HUGE strain at the moment due to massive swings in prices causing the finance required for hedging to be vast. Far beyond the capabilities of smaller companies. 10 years ago, a 100,000 barrel cargo would have swings of $1 Max. On the same cargo we are seeing $20 swings, this is driving the physical market into the ground.

  3. True and with the credit crunch, credit lines are not as easy to increase except for the very large physical trading houses…it’s not that desperate though. In many cases you don’t have to post margin for the weekly CFD and hey, if you move the equivalent of a VLCC a month you may very well end up with over 2.4Bn in credit lines for next year…it’s not too bad, you just have to be cautious.

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