Several European and U.S. banks have recently moved into the increasingly lucrative energy trading business or have taken steps to expand their involvement in oil, gas and power derivatives.

The banks have been raising their profile in commodity derivatives over the past two or three years, capitalizing on their credit worthiness and on the relative profitability of commodities-based investments as more traditional markets like equities, falter.

As oil prices have soared this year to record highs, major fuel users like airlines have been reviewing their hedging policies in the face of accelerating costs and shrinking profits.

Banks, as well as hedge, pension and leverage funds, are looking to cash in on increased customer demand for financial instruments aimed at offsetting any future shocks in energy prices.

The new players, as well as those that have been expanding their existing trading and marketing operations in energy and commodity derivatives, are listed below.

Dutch bank ABN AMRO announced last week that it had recruited a team of senior energy traders from rival banks to bolster its derivatives operations in London and New York.

The bank said on Tuesday it has recruited top talent from BNP Paribas, Tokyo Mitsubishi and Deutsche Bank.

“These hires kick-start our intention to build a market leading global energy derivatives platform, providing advanced hedging and risk management services for corporate clients, as well as sophisticated commodity based investment products for institutional and private investors,” said Wayne Harburn in a statement. Harburn was recruited earlier this year as head of commodity derivatives trading at ABN AMRO.

Dresdner Kleinwort Wasserstein, the investment trading arm of Germany’s Dresdner Bank, said last month that it was getting into energy trading with the formation of a new London-based business.

DKW said it had hired Neil Rothwell, formerly with Germany’s RWE, as managing director and head of commodities with a brief to set up the energy trading operation over the next six to 12 months.

Barclays Capital, a unit of British bank Barclays PLC, already active globally on oil derivatives markets, is now moving into the U.S. power market.

“U.S. power is our most recent investment,” Benoit de Vitry, global head of commodities for Barclay Capital told Reuters last week. “We started trading financials in May and by the end of the year we’ll also engage in physical power and gas trades in the U.S.”

Wall Street bank Merrill Lynch, which sold its energy-trading unit to Maryland-based Allegheny Energy in 2001 for $490 million, now intends to get back into the business.

Merrill’s chief financial officer Ahmass Fakahany last month described commodities as a “missing piece in the jigsaw,” adding: “It’s important to be in it and participate in that asset class … if you look at our results this quarter, certainly if we had more of a commodities presence we would have benefited from that.”

Credit Suisse First Boston unveiled a 50/50 joint venture with Texas-based utility TXU Corp in May that is to be the exclusive power trading and marketing vehicle for both companies in North America.

The new entity is scheduled to begin trading power in the early autumn and later to expand to trading gas and other energy-related commodities in North America.

CSFB said in a statement it had “been exploring entry or investment in the energy trading and marketing business for some time; this transaction will enable us to accelerate entry into the sector … this is an opportunity to invest in the growing energy commodities business.”

The newcomers are seeking to challenge the traditional dominance in energy and commodity markets of the two Wall Street banking heavyweights, Morgan Stanley and Goldman Sachs.

Goldman Sachs last year added to its energy portfolio when it bought El Paso Corp ‘s interest in East Coast Power for $456 million.

It also bought private U.S. power producer Cogentrix Energy, adding 26 power plants and 3,300 megawatts of generating capacity to its existing assets, also purchasing the trading books of Dynegy Inc..

Deutsche Bank is widely regarded as the biggest financial player in a second tier of global banks seeking to increase their market share on global energy markets.

Barclays Capital, Citigroup unit Citibank, Bank of America, Societe General, BNP Paribas, UBS Warburg and Credit Agricole unit Calyon, are seen as the other main banks in the chasing pack.