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Junior/intermediate level, leading international bank, London: Base salary: £60,000; bonus (P&L and product dependent): around 100%

It wasn’t long ago that the commodity trader was looked down upon by other City folk, seen as being on a par with the lowly insurance broker and a million miles from more appealing areas like equities or fixed income. No longer.

“Commodities generally – and energy in particular - have become very sexy areas. They say we are five years into a 15 year cycle of high oil prices; if so, this will be reflected in the demand for, and pay of, quality commodities traders,” says Paul Chrispin of Principal Search, who says the market is “frenetic”.

Chrispin and other head-hunters say demand for all good commodity traders is up (including metals, although softs remain in the doldrums).

However it is energy is driving this market - and little wonder, with oil at nearly $65 a barrel and gas prices riding higher than at anytime in recent memory.

“For the trader, oil pays more than gas which pays more than power, because oil is more liquid and volatile, and that means more risk and greater opportunity,” says Nick Mooney of Exchange Consulting.

So how does one get into this potentially lucrative field? Traders can work either for specialised commodity firms, oil giants, utilities or international banks, with all now broadly paying on a par: they have to because the competition for quality individuals is so fierce. Banks have been particularly active in building up their teams.

“The high price of oil and gas makes companies want protection from further price increases, whilst banks also see this as a prime opportunity to trade on a propriety basis: price volatility means the opportunity to hire good traders who can make you a lot of money,” says Principal Search’s Chrispin.

That said, Mooney says it is rare for commodity traders to start their career at a bank: most move across from an oil major or utility. The typical fledgling trader? Well-educated – “you don’t get a look in without a good degree,” says Chrispin – numerate and quick on his or her feet. Key too is the ability to grasp the fundamentals of the market quickly and accurately: specific geographic experience does not go amiss.

Assuming you have all this and have secured yourself a role at a decent institution, how much are you worth? Chrispin says a typical starting base is around £30,000, rising to £45,000 after two years and then £50,000-60,000 after four years. Mooney is more sanguine, suggesting a junior will pull in a base of between £60,000-80,000, maybe rising over £100,000 after five years. Jakob Bloch of Commodity Appointments suggests a junior (oil option) trader with a bank would be looking at a base salary in the range £50,000-60, 000 with a discretionary bonus of 30-50%, with an intermediate trader enjoying a £70,000-80,000 base with bonuses at a fixed percentage of their own P&L.

The real money, of course, comes with the bonus, which recruiters say is very much P&L driven and product dependent (with oil traders getting paid the best). Banks tend to have the best bonus schemes although some of the majors are catching up: BP and TotalFinaElf are cited in particular, with Shell catching up.

Mooney says that for somebody with four to five years experience, a good track record and after a good year - like 2005 should be - could expect total compensation of between £250,000-300,000: after a bad year however, this would be much lower. Chrispin says starters don’t see much in the way of bonus but after two years and up to five, could expect up to 200%. Beyond this, total remuneration gets more complex – though usually in a nice way.

“At VP or assistant director level and up, you are paid a percentage of P&L, often 8-10%, although things are not often written down. That means if you contribute, say $10m of revenue, your final package will be correspondingly big,” says Chrispin.

So next time you hand over £60 to fill up the family hatchback consider that for those lucky but infuriating few, high oil prices are more of a blessing than a curse.

Figures and commentary by Principal Search, Commodity Appointments and Exchange Consulting.