With oil prices falling this week following revelations of a larger than expected US fuel inventory, but expected to rise in future on concerns about lower exports from Iran, there are still plenty of opportunities to profit from commodities trading.
Little surprise, therefore, that recruiters say banks are still hot to hire commodities traders. "There's still a lot of momentum in commodities," says Jakob Bloch, managing director of search firm Commodity Appointments. "I'd expect it to continue for the next couple of years."
The latest banks to add weight in commodities are Bank of America and Dresdner Kleinwort Wasserstein (DrKW). Earlier this week, Bank of America revealed the addition of a metals trading business to its existing commodities platform, and announced the recruitment of at least five staff across New York and London. Meanwhile DrKW poached two commodities bankers from the Royal Bank of Canada.
Other banks are equally enthusiastic. Last week Deutsche Bank declared its intention to expand its commodities business. Bloch says Goldman Sachs, JPMorgan and Merrill Lynch are also likely to add to their commodities teams this year, and that other large European banks with an existing presence in commodities financing are looking to enter the trading arena.
The biggest demand is for traders who understand both physical commodities, and their related financial instruments, says Bloch.
A commodities trading business may not always be a blessing, however. While commodities contributed to a strong performance at Merrill Lynch and Goldman Sachs in 2005, Citigroup recently blamed its commodities group for the the poor performance of its trading operations last year.