Strong US oil market fuels demand for talent

The US oil market had a strong year in 2016, on the back of a record-breaking 2015 for trading houses, with the first crude exports leaving for Europe in 40 years and America finally becoming a major exporter. With a decent amount of production taking place in the Middle East as well as Iran coming back into play following the partial lifting of sanctions, there was an oversupply across both crude and products which has led to a record high in combined crude and product stocks.

A number of derivatives traders generated high returns in the two days after the November announcement by the Organization of Petroleum Exporting Countries (OPEC) that it would halt the supply of 1.2 million barrels a day from January 2017. This was followed in December by non-OPEC countries agreeing to cut their output in a move to reduce oversupply and boost prices, signalling the first global pact in 15 years and prompting the trading houses that had called the move to start expanding their teams.

Such announcements always heavily influence the market and drive price volatility; however, we now expect the oil price to bounce between $45 and $60 a barrel throughout 2017, with crude consistently stabilizing somewhere around $55 towards the end of the year.

As a result of the bullish conditions, we continue to see more foreign companies looking to set up operations in the US which is driving continuing demand for strong talent. Last year saw Socar, the state oil company of Azerbaijan, and Gunvor, the fourth largest crude oil trader in the world, both moving to expand in the US and we expect more to follow them in the year ahead.

Gasoline was the hot topic for 2016 and we expect 2017 to be a transition for that market, with gasoline still high in inventory. Last year, businesses grew across both the financial and physical refined products space, with a particular focus on recruiting proprietary traders, and we anticipate more of the same this year.

We have seen continued movement of talent from the banks and the oil majors to physical trading houses in recent years, with Barclays being the latest institution to leave the energy trading space completely. It is hard to predict how this trend will play out in 2017, which will be an interesting year due to political events on both sides of the Atlantic, but we could see changes in the banking field as the Trump administration looks to potentially revise both the Dodd-Frank Act and the Volcker Rule. Both pieces of legislation, introduced after the global financial crisis, placed restrictions on banks that limited their trading. Though we do not immediately anticipate any wholesale turnaround of that strategy even if the rules are relaxed, there is potential for an increase in hiring on the banking side if moves are made to remove red tape, and we continue to closely watch developments on that front.

With the US energy markets so strong and oil prices finally climbing, the trend is for major global firms to look to be competitive in this market and, therefore, we expect a busy year for movement of talent in 2017.