Commodity Trading

Capturing value from commodities
We help clients capture value from commodities optionality across the oil and gas value chain while managing risk in an era of heightened volatility.

We serve clients across several key areas:

  • Market perspectives for commodities. Developing fundamental price forecasts and trading flow projections using advanced modeling techniques to analyze supply and demand dynamics, marginal production costs, and key market fundamentals
  • Growth transformation and business expansion. Helping clients build trading organizations from scratch and advance existing trading sophistication and capability building (for example, power, trading, value chain optimization [VCO], and marine optimization)
  • Integrated value chain optimization. Unlocking value at the intersection of trading and operations
  • Operating model effectiveness. Defining and designing organizations, capabilities, activities, and governance to enable an effective and efficient deal life cycle
  • Digital transformation. Identifying, designing, and building digital analytics and technological solutions to enable trading margin capture (front-office decision-making) and cost effectiveness (report automation)
  • Talent development. Designing incentive and compensation models to attract and retain top talent
  • Enterprise risk management and resilience. Developing risk strategy, designing risk foundations, and implementing risk and resilience solutions to ensure adherence to guardrails

Examples of our work

Identifying digital solutions
Helped a European downstream client identify digital solutions to improve refinery yield, energy efficiency, equipment reliability, and sales and retail margins—including building a digital platform to manage an integrated downstream value chain.
Establishing a global trading organization
Partnered with a global metals and mining company to develop the strategy and business plan for its global trading organization, unlocking asset value and enhancing resilience amid market volatility. Delivered a comprehensive two-year implementation plan, including the strategic rationale and trading strategies across four major commodities, and 20 actionable trading plays.
Redefining corporate strategy for growth
Supported a North American metals trader in redefining its corporate strategy. Conducted a detailed assessment of value pools and identified and implemented growth initiatives. Launched a program management office to oversee execution, expanded geographic footprint, and implemented operating model changes to upscale trading capabilities.
Strengthening trading fundamentals for a new energy player
Collaborated with a newly established oil trading subsidiary of a leading Asian NOC to strengthen trading fundamentals and achieve profitability. Conducted a comprehensive gap analysis and developed an end-state design for risk management, operating model, and trading processes. Defined a roadmap to improve trading levers such as blending plays, geographic arbitrage, and freight optimization. Targeted a 1–2 percent margin improvement.
Optimizing agricultural supply chains
Partnered with a global grain processor to optimize midterm planning in the North American grain export value chain. Developed a planning optimization tool with a cross-functional team, integrating data science, UX design, and operational expertise. Engaged end users throughout the process to ensure adoption and impact. Delivered a 10 percent throughput increase, a 20 percent reduction in demurrage costs, 2 percent transportation cost savings, and a 30 percent improvement in the margin and commodity mix.
Building a renewable diesel feedstock trading desk
Assisted a regional oil and gas producer in establishing a trading desk for renewable diesel feedstocks, such as used cooking oil and PFAD. Designed an operating model through cross-functional workshops and on-site interviews, aligning it with the company’s growth objectives. Stress-tested the blueprint with a trading pilot, enabling more than 50 percent volume growth and improving S&OP processes. Delivered clear actions to implement the operating model and support future capacity expansions.
Transforming supply and trading optimization
Supported a leading independent US oil refiner in transforming its supply and trading business to enhance asset optimization and value creation. Delivered a commercial transformation through trading and refining optimization, wholesale channel growth, logistics improvements, and an agile operating model. Achieved sustainable commercial earnings growth and a 5 percent market capture improvement in refining.

Featured Capabilities

Commodity trading diagnostic

Evaluation framework that assesses current trading capabilities and performance through qualitative and quantitative benchmarking to identify the optimal target state and development opportunities. Examples include:

  • assessing operating model and capabilities across the trading organization
  • benchmarking trading KPIs
Energy management analytical solutions

An energy management platform with over ten tools that can support utilities through decision-making and risk mitigation across multiple asset classes and time horizons. Examples include:

  • short-term power market optimization
  • medium-term optimization
  • portfolio modeling to evaluate effects of differing merchant strategies, risk/return trade-offs, optionality and flexibility, diversification, and stress tests
Physical commodities trading solutions

A platform of solutions across the full physical trading life cycle to support traders in driving value creation. Examples include:

  • advanced vessel tracking database and freight optimization
  • value chain and trading portfolio optimization
  • fundamental pricing via supply and demand forecasting
  • centralized global arbitrage modeling
  • technical sentiment dashboard
  • what-if scenario modeling and price forecasting
  • profit and loss (P&L) and value at risk (VaR) stress-testing
  • AI-powered volatile organic compounds (VOC) explainer
  • gen AI market research

Featured Experts

Roland Rechtsteiner
PartnerZurich
Supports companies that supply, trade, and buy commodity-related products, helping them grow, increase efficiency, and address clean energy opportunities
Fransje van der Marel
Senior PartnerAmsterdam
Drives sustainable resilient growth at energy, chemicals and industrial companies
Aleksander Petrov
Senior PartnerLondon
Leads our work in risk advanced analytics in Europe, bringing deep expertise to financial services institutions and corporate clients in stress testing and other risk topics.
Xavier Veillard
PartnerParis
Brings deep expertise in the LNG, gas, and power sectors to advise leading utilities, industrial companies, and others on strategy, investment, growth, and transformation
Joscha Schabram
PartnerZurich
Serves utilities, energy and renewable players, commodity trading organizations, technology providers and grid operators navigating the fast-changing energy world
Andrew Warrell
PartnerWashington DC
Leads McKinsey’s commodity trading and risk initiatives for the Americas and globally for oil and gas
Arvind Govindarajan
McKinsey Global Institute PartnerBoston
Focuses on global economic trends, productivity, and risk management, and brings deep expertise in scenario design and modeling across industries.
Dumitru Dediu
PartnerNew York
Helps leading energy and capital-intensive companies with shaping their strategies and work in M&A, commercialization, negotiations, and transformations (including digital), bringing particular expertise in the gas and broader energy sector

Featured Insights

Ship delivering cargo in the stormy Mediterranean sea
Article
How to capture the next S-curve in commodity trading
-
In the past few years, commodity traders focused on taking advantage of high volatility. Today, amid leaner industry margins, successful traders can maximize value from existing assets.
An image of a blue industrial valve that is centrally positioned on a blue pipeline against a matching blue background.
Article
Unlocking value from power and natural gas trading in North America
-
North America’s power and natural gas markets are being remade. Players might benefit from paying attention to five trends and developing a suite of leading-edge capabilities.
Cargo ship with grain at sea at sunset.
Article
The critical role of commodity trading in times of uncertainty
-
As increased commodity trading value pools attract new competition, successful players will differentiate by managing illiquid risks and embracing data-driven trading models.
Aerial view oil refinery and fuel storage tanks at night time.
Article
Improving refinery margins through value chain optimization
-
For North American downstream oil refineries, now is the time to improve value chain optimization through focused, management-led transformation efforts that could drive margin improvements.

Related Insights

General Info

Energy & Materials Blog

Connect with our Oil & Gas Practice

Contact