Ex-Goldman Head of Nat Gas Trading John Knorring on the one equation behind every commodity trade, why the US has the cheapest gas in the world, & buying silver in the low $30s, riding it to $120, then watching it drop to $65 in a day.
John Knorring (Former Head of Natural Gas Trading at Goldman Sachs | Commodities trader at DRW | Founder of Green Tiger Markets)
"If you can leave Wall Street with your name intact and your house paid for, you're ahead of 90% of the people who go there."
We cover:
- Supply minus demand equals change in inventory, and why price does all the balancing when storage is full or empty
- Why crude at -$40 in 2020 made perfect sense
- "Gas Vegas": why US nat gas is so volatile (prices nearly doubled in a week this January)
- The real reason US gas is the cheapest in the world: the Henry Hub contract
- How Aubrey McClendon and the shale revolution flipped US power from coal to gas
- The Goldman framework for trading: idea, expression, execution, money management
- The silver trade, and the hardest question in trading: what do you do when it's working?
- Why physical gas traders will outlast derivatives traders in the age of automation
Highlights:
00:00 Intro
02:00 From CBOT intern to Goldman's nat gas desk
05:10 Supply minus demand equals change in inventory
08:19 Energy as the fundamental cost: burn it or store it
12:00 Storability spectrum: coal, oil, gas, and power
14:30 Why nat gas is so volatile: inelastic demand, weather, storage
17:20 Henry Hub: why US gas trades below global prices
20:40 Basis risk when regional hubs decouple from Henry Hub
22:10 Gas Vegas: inventory regimes and 20 years of price spikes
27:20 High prices build supply: horizontal drilling and the shale revolution
29:50 Low prices build demand: power burn, LNG exports, data centers
34:20 The trading framework: idea, expression, execution, money management
38:00 Silver from Bunker Hunt to the $50 psychological ceiling
40:30 The silver trade: structural deficit, cheap calls, missed exit
46:00 Position sizing lessons, the duck curve, and the LNG export wave
49:00 Why physical gas trading outlasts automated derivatives desks
51:10 Name intact, house paid for: career advice for Wall Street
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