The longest bull market in at least five decades — and its biggest tailspin since 1980 two weeks ago — is driving up demand for anyone who can make the transition from stocks and bonds to commodities. For banks such as Citigroup Inc., the world’s largest financial services company, and UBS AG, Europe’s largest bank, salaries are soaring for anyone with more than a passing acquaintance with New York residual contract cargoes and Asian Tapis crack spreads.

“If you ask what’s hot in commodities, it’s good people that trade the commodities,” said Robert Gottlieb, Bear Stearns Cos.’ managing director of precious metals in New York. Hiring is “extremely difficult because this has been a very small community,” said Gottlieb, who left HSBC Holdings Plc in January.

Taylor, a former natural gas and power trader, left Morgan Stanley for JPMorgan in March 2005 and became co-chief of energy trading in September at the age of 34. Taylor declined to be interviewed. Statoil to Wall Street Refvik, a 48-year-old Norwegian, was the “King of New York Harbor” after he leased storage terminals in the 1990s where Nymex-traded oil can be kept.

The leases allowed Morgan Stanley to secure heating oil when prices were low and sell it when the market gained. A 16-year veteran of Morgan Stanley, Refvik started at Stavanger-based Statoil ASA, Norway’s largest oil company, in 1981 after graduating from the Norwegian School of Economics and Business Administration in Bergen, according to a profile of Refvik in the oil company’s in-house magazine in 2003. Refvik declined to comment.

Twenty years of poor returns in commodity markets has led to a “thin talent pool of traders,” said Peter Fusaro, co- founder of the Energy Hedge Fund Center in The Woodlands, Texas, which helps companies form energy trading strategies. “There’s more fuel coming into these markets, which are already undercapitalized as it is.”

‘Masters of Universe’ The fourfold increase in copper prices in the last five years and gold’s climb to a 26-year high in May created a lucrative career alternative for traders. The heads of bond trading desks are earning about $1.5 million a year, while the best equity-derivatives traders take home about $4.5 million, according to Shaun Springer, who runs London-based recruiter Napier Scott Executive Search Ltd.

“Banks are paying more aggressively for commodity traders and are having to guarantee bonus packages for up to two to three years ahead,” said Jakob Bloch, managing director of Commodity Appointments, a recruitment company in London.

CEOs Make Less A 30 percent increase in oil in the past 12 months to $71 a barrel prompted energy companies to increase their trading desks. Sempra Energy of San Diego, owner of the biggest U.S. natural- gas utility, has as many as 30 commodity traders that make more than the $2 million earned last year by Chief Executive Officer Don Felsinger.

“That’s what it costs to be in this business,” Felsinger, 58, said in a May 17 interview. Some utilities use so-called residual contract cargoes, shipments of fuel burned by power stations, to lock in costs. Oil refiners, airlines and manufacturers buy and sell futures, or contracts for delivery of a commodity at a specified time and price, to take advantage of price changes. Refiners, for example, might analyze and trade Tapis crack spreads to assess the potential profits from refining a barrel of the Malaysian grade of crude oil.

At Constellation Energy Group, the owner of Baltimore Gas & Electric, its best-paid employees last year worked in the commodities unit. Division managers Felix Dawson and George Persky were paid $5 million bonuses in 2005, according to a filing with securities regulators. Their base salaries are $200,000 and $175,000 respectively. Constellation Chief Executive Officer Mayo Shattuck, a 51- year-old former investment banker, earned about $4 million, including $1 million in salary and $3 million in bonuses.

Bank Expansion Goldman Sachs Group Inc., the largest Wall Street firm by market capital, and Morgan Stanley, the third biggest, are the dominant investment banks in the energy industry. They received more than half the estimated $7 billion in revenue that global banks got from commodities last year, according to Ethan Ravage, a San Francisco-based consultant for the financial services industry. Revenue may rise 15 percent annually through 2010.

UBS agreed May 25 to buy ABN Amro Holding NV’s futures unit for $386 million to become the world’s biggest broker of commodities contracts. Credit Suisse Group in February formed an oil-trading venture with Glencore International AG, a closely held commodities trader based in Baar, Switzerland.

“We need more players, market makers and risk managers,” said Benoit de Vitry, global head of commodities at Barclays Capital, the investment-banking unit of London-based Barclays Plc. “One potential issue, for some, is staffing.” Barclays Capital this year hired half the 40 people the company plans to add to its 140-member commodities team as of 2005, de Vitry said. Commodities accounted for 11 percent of Barclays’ revenue last year, up from 6 percent in 2004.

Investor Interest Investors, lured by better returns than those available from stocks and bonds, are putting more into commodities. Fund investments in commodity indexes and other products may exceed $120 billion by 2008, compared with $80 billion last year, according to estimates from Barclays.

The Reuters/Jefferies CRB index of 19 commodities has gained 13 percent in the past year, compared with a 5.6 percent gain in the Standard & Poor’s 500 Index of stocks. U.S. Treasuries have lost investors 1.3 percent, according to Merrill Lynch indexes.

At least 500 hedge funds now trade some type of commodity- related securities, up 40 percent from a year ago, according to the Energy Hedge Fund Center. Citigroup Hiring Citigroup, the world’s largest bank by market value, plans to increase the number of people trading oil, metals and other commodities to 150 by the end of the year from 85, according to John Casaudoumecq, who runs the bank’s global commodities unit.

“It’s getting more difficult to hire as more banks are expanding,” he said. New York-based Citigroup moved Ananth Doraswamy from its fixed-income unit to oversee the Asia-Pacific commodities business at the end of last year.

Citigroup plans to expand power and gas trading in North America to Europe and start trading coal and carbon-dioxide emissions. Its revenue from principal transactions in commodity trading was $910 million last year, more than double the $371 million in 2004. SocGen Raids Equities Energy and commodities trading revived about three years after the bankruptcy of Enron Corp., once the world’s largest energy trading firm, in 2001.

The ruin of the Houston-based company wiped out thousands of jobs and former Enron Chief Executive Officer Jeffrey Skilling and Chairman Kenneth Lay were convicted of fraud and conspiracy. Skilling and Lay each face 25 years in jail. The shortage of traders has prompted banks to move staff to their commodity and energy desks from other parts of their businesses.

Societe Generale, France’s third-biggest lender, already has transferred traders from its equity and interest rate units to its commodities-trading team, which has expanded by 25 percent in the past year to 300 people, said Edouard Neviaski, 40, deputy head of commodity trading at the Paris-based bank. “Very good people are getting expensive,” Neviaski said.

“We want to make sure we keep good people. It will be a challenge.” Societe Generale is hiring people for its emissions credits venture with Rhodia SA, France’s largest specialty chemical maker, Neviaski said. High `Asking Price’ BNP Paribas SA, France’s largest bank by market value, also pulled people from other desks.

In April the bank picked Amine Belhadj, 43, former manager of equities and derivatives for the Americas in New York, as global head of commodities in London. Zurich-based UBS in February moved Peter Ghavami, 38, from fixed income sales to run its global non-metals commodities group. “Many a time we have approached oil traders to take on sales and marketing jobs but we have been turned away by their asking price,” said Lena Lim, a Singapore-based headhunter who runs her own agency.

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