Welcome to Gas Vegas: Commodities Trading From First Principles With Ex-Goldman Commodities Trader
Show notes
Former Goldman Sachs head of natural gas trading John Knorring delivers a lecture on commodities trading from first principles, adapted from the one he gives to Princeton financial engineering students. Starting from one equation, supply minus demand equals the change in inventory, he explains how storage constraints drive price, why crude oil went negative in 2020, and why US natural gas is so volatile. Topics include Henry Hub futures, physical delivery and arbitrage, basis risk, the storability of coal, oil, gas, and power, and how weather shocks can double nat gas prices in a week. Essential viewing for energy traders and quants.Knorring then covers the shale revolution and Aubrey McClendon, how low prices built demand through power burn, LNG exports, and AI data centers, and the Goldman trading framework: idea generation, trade expression, execution, and money management. He walks through his bullish silver trade, from the structural deficit and gold-silver ratio to buying futures and cheap upside calls, and what he got wrong at $120. The episode closes with market trends, including position sizing lessons from Amaranth, the solar duck curve, the US LNG export wave, and why physical gas traders will outlast automated derivatives desks, plus timeless career advice for Wall Street.