Global commodity trader Koch Supply & Trading has cut dozens of workers across at least four offices worldwide, several sources said on Tuesday, as the firm restructures its business.
The cuts at the unit of Wichita, Kansas-based Koch Industries Inc, the industrial conglomerate owned by billionaires Charles and David Koch, affected traders and support staff in its United States, Switzerland, United Kingdom and Singapore offices.
A string of notable hedge funds in the commodity space have closed over the last year, while restructuring efforts were launched at firms like Goldman Sachs after losses in 2017.
Some commodity trading firms and banks posted major losses due to muted client activity and wild fluctuations across energy markets. Bonuses across the industry were also low, and some hedge funds have chosen to exit energy trading.
Source: Global commodity trader Koch cuts staff in restructuring
British bank Barclays Plc has joined the list of top banks to exit energy trading, an exodus that analysts say raises concern among oil producers that falling liquidity means they cannot use derivatives for their basic function: to hedge risk by locking in future prices.Wall Street firms have scaled back in commodity markets since the 2008 financial crisis from owning physical assets or taking positions in the market in the face of regulatory scrutiny. The banks were big players in the market for derivatives years into the future.The departure of Barclays exacerbates the scarcity of counterparties for trade when producers are trying to hedge their production for 2018 and beyond, potentially raising the cost to lock in that output.
Source: Barclays’ exit from energy trading stirs concerns over liquidity | Reuters
Even in the closely knit energy industry they are virtually unknown. On the streets of Geneva, London and Houston they go unrecognized. Yet a handful of executives were oil-industry standouts in 2015. They thrived because of — not despite — plunging crude prices.From Total SA to Trafigura Group Pte, trading emerged as the industry’s cash cow.Take Vitol Group BV, the world’s largest independent energy-trading operation. The 50-year-old company reported net profit of $1.6 billion last year — the fourth highest ever, buoyed in part by the strategies employed by the teams headed by Mark Couling, chief oil trader.“The oil trading industry as a whole enjoyed the best year since 2008-09,” said Damian Stewart, managing director at Human Capital, a commodities-focused headhunter.
Source: The Invisible Money Makers Who Thrived During 2015 Oil Slump – Bloomberg