The oil major has stepped up efforts to increase derivatives trading after several departures over the past two years, according to people familiar with the matter. Exxon is also reworking the pay structure for traders, including bonuses, said some of the people, who asked not to be named because the information isn’t public. The company is still ironing out specifics and nothing is final, the people said.
The potential expansion comes as commodity traders enjoy their most profitable period in history, thanks to high volatility and surging energy prices exacerbated by Russia’s invasion of Ukraine. Vitol Group, the world’s largest independent oil trader, posted a record profit of $4.2 billion last year while BP Plc, one of Exxon’s chief competitors, saw earnings last quarter reach a 14-year-high as a result of refining and trading profits.
“We are not going to engage in speculation about our current or future business plans,” Exxon said in an emailed statement. “We continue to invest in our trading efforts.”
Exxon in 2018 took baby steps to set up a trading team to rival other oil supermajors. But as the Covid-19 pandemic sent demand crashing in 2020, the company pulled back, cutting capital available for traders to put on positions. While Exxon focused its trading around its assets, using them as a natural hedge against any positions it took on, its less risk-averse peers, BP and Shell, brought in bumper trading profits.
This year, Exxon flagged losses of more than $3 billion from its derivatives positions through June. It was not immediately clear whether these paper losses were a reflection of the company’s overall trading performance. Still, the energy giant posted its highest-ever quarterly profit and said global energy supplies will remain tight in the short tern. International crude prices jumped above $130 a barrel briefly in March, the highest in over a decade, but have since fallen by more than 20%.
Exxon has already added at least three traders and analysts globally over the past two months, said people familiar with the matter. In recent weeks, the company has posted a number of job vacancies for gas, freight and products traders in London and Houston.
“To further capitalize on commercial insights, we are rapidly building our trading, origination & analytical capabilities to capture new assets and enter new market areas in the US and globally,” the company said in job advertisements posted on its website.
At least one job listing said the successful candidate would be part of the company’s Crude Trading Analytics team, currently based in Leatherhead, Surrey, but with a view to relocate to a more central London location in early 2023.