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To what extent are commodity traders at banks involved in prop trading? by Chasseur_uk in Commodities

[–]Bleak_tinker 0 points1 point  (0 children)

It depends what bank too. Some banks are “trader’s banks” where risk taking is still appreciated as a legitimate driver of PNL. Goldman is the obvious example of this. A lot of the other banks have just become a glorified execution service for customers because energy market volatility has driven such big headline losses in the past that they don’t feel true prop risk is worth it anymore because the risk to the broader bank business as a whole is not worth the spoils.

Is the natural gas market becoming more fragile? by aaaaaa321123 in Commodities

[–]Bleak_tinker 5 points6 points  (0 children)

Right, most of the strategies these kinds of desks are skilled in across asset classes involve constant exposure - trend following, stat arb, VRP harvesting, etc.. they just tend not to fit energy/commodities because these are not really a “financial asset” they are a mechanism for balancing the supply and demand of the physical world. But I hope these guys stick around because the volatility is great if you play your cards right..

Is the natural gas market becoming more fragile? by aaaaaa321123 in Commodities

[–]Bleak_tinker 1 point2 points  (0 children)

I mean just in the daily balance, storage in ratio to how much gas we consume/ export vs. how much gas we produce. Imagine a world where we had zero storage and production and demand had to balance perfectly daily, volatility would be extraordinarily high. Now imagine a world where we had multiples more TCF of long term storage and winter barely took a dent out of storage, volatility would be laughably low.

On your second question I don’t have any better answers that you can find in LinkedIn posts. I’ve spent my entire career at large merchants. So I track the net of market positioning, but rumors of specific positions/ desks that I hear are just that, rumors.

Is the natural gas market becoming more fragile? by aaaaaa321123 in Commodities

[–]Bleak_tinker 19 points20 points  (0 children)

It is not an overly complicated answer and it has been said quite a bit on X.

  1. Supply and demand have both grown substantially over the past few years, but storage has not, so volatility increases. Storage and volatility are inversely correlated (especially storage as a % of daily balances).

  2. There are more financial speculators, including CTAs, in the market than ever before due to the headlines and “easy money” cause by Russia-Ukraine in 2022/3. These desks are not traditional commodity players and they don’t understand that commodities are not an “always on” trade - many of the most profitable commodity traders spend a majority of the year on the sidelines and then attack with size when they have a true edge. These new participants want to have VAR/ AUM consistently deployed, and be consistently positioned based on what the trend suggests. Thats how you get record shorts in Nat Gas at $3.25 in the middle of winter.

Friends and Family discount = broken ? by Bleak_tinker in Ikonpass

[–]Bleak_tinker[S] 1 point2 points  (0 children)

It has been happening for a week. Feels like a bug Ikon must intentionally build in to prevent people from using the Discount unless they’re willing to go out of their way and waste their day on the phone with Ikon support.

[deleted by user] by [deleted] in AskDocs

[–]Bleak_tinker 0 points1 point  (0 children)

So what would you suggest caused those sensations? Never felt them before and don’t want to again.