Hedge funds are hiring natural gas traders as Europe braces for winter

Winter is coming and Europe is short of gas. Hedge funds are doing something about it. They are hiring portfolio managers to take advantage of the volatility. 

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DRW in particular seems to be suffering from departures. Following the exits of Teoman Guler, (head of US gas trading), Hayn Park (head of European gas trading), Michael Kennedy, Adam Findlay and Andrew Mugica (who's gone to Millennium), DRW has also lost Sayan Palchowdhury in New York. Palchowdhury, who began his career trading natural gas at Goldman Sachs, has gone to Balyasny Asset Management (BAM).

Balyasny isn't commenting. The fund has been building out its natural gas trading business for at least two years and started building a physical natural gas trading business in Europe under Kristian Juncker in 2024.  It's also been raiding Centrica energy, the trading arm of Denmark's Centrica group. Financial News reported this week that funds like raiding Danish gas talent because top engineering schools in Aarhus produce excellent commodities talent, and Denmark is proximate to the key German market. Rupak Ghose noted previously that Aarhus, a port city on the east coast of Jutland, has more than a dozen natural gas trading firms and is a focal point for talent. 

Kamran Subherwal, head of commodities at Redstone Search, said there's been a string of natural gas moves this year and that the "opportunity set in this sphere is decisively widening." 

Ross Gregory, the New York-based head of global commodities at search firm Omerta Group, a Kingsley Gate company, said the battle for natural gas traders has hit a "peak level." Top traders tend to have three to four hedge funds bidding for them at once, said Gregory. Traders from energy trading merchants and utilities firms who typically receive 15% and 10% respectively of their PnL are moving to hedge funds where they can 20%+.

The recent natural gas movers also include Zach Millman, who went from BP to Millennium to Castleton Commodities International and Xing Yuan, who's just gone to ExodusPoint.

Gregory says natural gas is an increasingly complicated market to trade. "⁠Natural Gas markets are interlinked globally more than ever, and traders need a greater understanding of broader factors affecting the US & European markets and how they link to LNG/TTF," Gregory observes. It's not just the fact that gas supply has been reduced by war in the Middle East. "El Nino is reshaping weather risks for the natural gas market," he adds. 

Although hedge funds are out there hiring natural gas traders, Gregory says they're wary of paying huge sign-on bonuses. "What we are seeing now, is that hedge funds will not just pay a lumpy sign-on for the sake of it. They might offer a first year guarantee or accelerator on PnL instead."

It probably doesn't help that funds have lost money when gas prices have fluctuated in the past. The Financial Times reported that DRW lost $176m earlier this year. Roscommon Analytics closed its US gas trading desk in January after losses. Rival hedge funds have been picking over its people.

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