r/Commodities

Can someby explain me in detail a full EFP transaction?

Let's make an example using TFM/TTF futures (but could apply also to Brent). "X" has a short position in sep26 with TFM ICE futures while "Y" is interested in receiving TTF gas in sep26.

If X wants to deliver TTF nominees to Y instead of ICE, both parties should register an EFP at ICE, where Y sells TFM future to X and X buys TFM future from Y. After that, there will be the OTC leg where X will sell the gas to Y.

According to this, X has nothing to deliver at ICE since its position is cleared (-TFM sep26 + TFM sep26), but what happens to Y?

Does it have to do something at ICE or just buy the TTF OTC from X? I feel like there are 3 legs inside the ICE environment where X net is 0 and Y has a future leg open.

Looking for watch recommendations. What do guys in the industry typically wear. I want to dress well but also not pretend like I'm a bigshot trader before I even take on any risk if that makes sense. Want a watch that shows class and being put together without acting like I'm showing off or trying to one-up any senior traders.

What are your guys’ favorite sites for obtaining news on oil markets?

I suppose in equity trading it's mostly algo/HF related operations. But how about oil and gas, specifically? network, better analysts foreseeing trends, quants paper trading derivatives? Everybody is looking at the same handful of commodities, so how can someone have an edge and generate additional profit.

In physical I'd think your network has a large impact, but how about prop shops? good ol' rack of servers near the exchange + nerds to get the alpha out of it? In EU power this seems to be the trend, if you are not humongous to have a lot of negotiating power, PPA's don't seem get you shit.

I can't find a single case of someone working through these guys and they seem pretty big judging from their offer selection encompassing all kinds of commodities in all kinds of locations worldwide. Has anyone worked with them?

Currently on a TDP (Oil focus) at a physical firm (Major/NOC vibes) wanting to speak to people who ended up switching to Commod desks at paper shops, funds, banks etc.

Curious to know about how things change once you aren't trading around physical optionality or using an information edge derived from your physical exposure.

How far into career did you switch, was it a good idea, do you think previously being at a physical firm gave you an edge on a paper desk, is it actually useful to know about operations, refining economics etc if you're just trading derivatives.

Loads of questions I could ask, any advice appreciated.

Hello!

I currently am a power trader at a global IPP/utility. Pretty much all our trading is asset-backed and for portfolio optimization, with little opportunity for speculative trading apart from a few storage sites. The main job is monitoring different units and optimizing bids, while getting exposure to real flows, constraints, congestion across all the major ISOs.

My goal and interests have always been in physical commodities, oil or gas. I enjoy the global aspect of these, and think it is fascinating that trading these global commodities are wrapped around macroeconomics, geopolitics, supply-chains, and real-world events. I'm very much a relationship-driven person, and am enticed by the human aspect still prevalent in physical commodity trading and operations.

With power being hot and a lot of shops building up their power trading desks, I wonder if it makes more sense to stay in power and focus on moving to a Trafi/Glencore/Gunvor/Castleton shop. I'd love if someone who works at a merchant can shed some light on the power desks daily responsibilities and tasks. And if someone who made a similar switch could highlight some of the major differences they saw moving from an IPP to a merchant and if they're happy with their move. I know you have access to virtuals, FTRs, options, congestion trading etc as well as the opportunity to trade further down the curve. Is it still entirely analytical looking at screens or is there some relationship/counterparty aspect? How much of your time is spent coding or building models? How does the mix of fundamentals you focus on change as you trade further down the curve? WLB? Do you enjoy it?

The active problem-solving, fast-paced and global nature of crude oil scheduling or natural gas scheduling has always intrigued me. I think these roles offer constant learning and active experiences, which I don't get much of currently. My plan has always been to move to scheduling/operations at a physical commodity shop and then potentially move into a trading seat. I know oil demand may eventually peak, so not sure if it makes sense to keep my same plan.

I'm essentially trying to figure out whether it makes more sense to build on the power experience I already have and work toward a merchant power desk, or pivot into physical oil/gas operations while I'm still early in my career.

Please I'd love to hear any and all insights. Thank you!

Hello,

I am in the US and have received offers as a natural gas scheduler at a gas pipeline company and as a power analyst at a generation company. My goal is to eventually become a trader in the power/gas space and it seems this is the moment to decide on one of the paths.

Before deciding, I would really appreciate if someone could explain the differences in both trading roles, such as what the day to day work looks like, rough range of total compensation at different stages/types of firms (IPP, trading shop, hedge fund, etc.), the general difference in trading styles/approaches and analysis done for trading, and the difference between power and gas markets from the perspective of a trader who works in either product.

I notice that power markets seem to have much more regulatory overhead and politics involved than gas markets, since electricity is a necessity.

I also understand that there is much overlap between the two roles and the products themselves (e.g. short-term demand in both is driven primarily by weather), and I have seen power traders also trade gas. I would like to know more about this and also if there are chances to switch between the two products or do both as a trader.

Thank you!

Hi everyone, I have recently been shortlisted for an interview with this company for an analyst role in the front office and I am hoping to get some honest insights from people who have worked there or have had first-hand experience with the company.

I have heard quite mixed feedback about the company from people in the industry. Bonus is great and people are nice, but culture is extremely toxic and political. Such toxicity is also tolerated by management.

I have also looked through the reviews on glassdoor but a number of the positive reviews are brief and do not seem to be real. So I am hoping to hear from people who can share more about their actual experience.

Feel free to DM me! Thank you.

Hey folks, currently I am in my final year of college, I have got a family business in trading and brokerage of edible commodities like veg oils and oilseeds. And I am keen on taking it forward

So I recently learned that even while future trading for these commodities is banned in India a lot of physical trade takes place for future shipments. So there are CBOT charts and NCDEX charts which can help us take decisions

Currently I am reading this book by John Murphy called the technical analysis of financial markets, and the book is pretty interesting

Can someone guide on if I should really pursue CMT or is there any other good path for me
.

Any suggestion is welcome. Thanks in advance

I work in trade finance, so every single day I receive messages from self-described commodity brokers looking for financing, instruments or introductions.

Some of the proposals are genuinely unbelievable.

There seems to be an entire online subculture convinced that someone will sell them $50 million of gold, copper, sugar, EN590, Jet A1 or another liquid commodity at a huge discount to market. They will then find a buyer at something close to market price and pocket the spread.

No balance sheet. No committed trade finance facility. No established supplier relationship. No inventory risk. No hedging. No logistics infrastructure. No meaningful working capital.

Sometimes they don't even have a direct relationship with the supposed buyer or seller.

Instead, there are five intermediaries between each side exchanging SCOs, ICPOs, NCNDAs, IMFPA agreements and commission sheets. Everyone is calculating their commission on a cargo that nobody in the chain has financed, controlled or even verified.

What amazes me is how strongly some people believe in the model.

If a producer or established trader controls a highly liquid commodity worth tens of millions of dollars, why would they give an unknown intermediary a massive discount and allow that person to capture a virtually risk-free spread?

Real commodity traders earn margins because they provide something economically useful: capital, credit, logistics, storage, transformation, market access, risk warehousing, arbitrage capability or reliable offtake.

Yet there is this parallel commodity universe where the business model seems to be:

**Find cheap cargo → find buyer → issue paperwork → become millionaire.**

And when you explain why the transaction makes no economic sense, they rarely reconsider the premise. They just assume they haven't found the right "direct seller" yet.

I encounter this constantly because I work in trade finance.

Where did this whole culture come from?

Facts

My two majors are Statistics and Cognitive Science on the decision making track. However, it’s not too late for me to switch Cognitive Science to Economics if that would make me a more prepared or attractive candidate for trading firms.

A lot of what initially attracted me to Cognitive Science was the focus on decision-making and understanding how humans behave, but I’m not exactly sure how applicable that would be to commodity trading. If anyone has any insight or experience with this, I’d really appreciate it.

Thank you!

Thought this might fall outside the early education thread, but I can repost there if not.

Often see posts on here from new grads asking how to break in, but I wanted to ask a slightly different question that might lead to some more insights.

What part of the market/commodity you started in do you remember struggling with as a junior? Why do you think you struggled with it and what made it click? How much of it is just sitting with it every day?

Conversely, what was something that came quickly or more natural for you that you noticed others maybe took longer to grasp? Why do you think it came quick to you? Was it you or your mentor/boss having great teaching skills?

Be it the jargon, logistics, supply/demand fundy's, storage, time spreads, optionality, weather, modelling, communication, pricing, products, structuring, p&l, the never ending amount of data to look at, etc. I am curious to hear what people have experienced across any commodity.

I prop trade west power and so far this summer has been fairly uneventful price-wise with most hubs bound by the same ~$5-7 range outside of the front strips. To top it off wide bid/asks and <200 MW of total volume traded have become the daily norm.

Im feeling pressure to deliver PnL yet there hasn’t been much price action in either direction compared to other markets. It’s been really draining to come in everyday and see nothing move materially outside of the occasional spike/dip over the last few months.

If there’s any other power/gas traders who’ve been in a similar spot I’d really appreciate any insight or advice.

Is contracts analyst worth the career pivot?
(TLDR; Currently back office at BB, potential chance to pivot to big firm (Gunvor/Vitol/Traf. worth?)

I am a recent fresh graduate currently working in a back office role in a bulge bracket bank. While it pays relatively well, I have found it to be really boring and mundane.

I have always been keen to pivot to commodities but coming from a non target relatively unknown university, graduate programmes are out of the equation.

I have been interviewing at a large independent trading firm for a contracts analyst role. will be taking a pay cut but I am willing to take it if this seat provides me with opportunities for potential upward mobility.

Would you guys happen to know if this role is a good starting ground assuming all goes well?

Ultimately I would like to end up in front office, potentially trading but ofc I know its competitive.

Any advice / knowledge relating would be greatly appreciated!

Thank you!

Hello all,

in my spare time, have taken up researching UCO/yellow grease/ag oils markets. Anyone have any resources on these markets? Major players? Any public pricing? Do forward curves even exist or is all price discovery in cash markets? Seems really nice but curious if anyone dabbles in these markets.

How prominent is nepotism in getting a job in one of the major trading houses? What would entry level pay be like for operations in Traf/Vitol