There are many entry barriers if you want to get associated with crude oil trading. The first and foremost entry barrier to this business is the amount of funds required to handle even smallest of the crude parcels. In case you have managed funds then comes the second hurdle i.e., getting allocation of crude from a refinery.
Often getting allocation of oil from a Refinery is quite a challenging task, while there are many buyers willing to off take the parcels directly from the refinery the commercial supply of a refinery is limited. So does one get associated with this business and still can make some money? The answer to this can be working in the capacity of a 'Facilitator' in the business.
To become a 'Facilitator' in oil business you do not need loads of investment or excellent relationship with a refinery to get allocation of oil. What you actually need is right knowledge and expertise you hook up genuine buyers and sellers. One should be in the industry for long to have acquired knowledge related to the dynamics of this business. Your knowledge of the business will help you in identifying and impressing genuine buyers and sellers.
The first step involved in working as a facilitator is to get mandate from either buyer of the seller. It is very important that you can secure one end of the deal. You must have either the buyer or the seller in confidence before moving ahead with finding the right match. It always helps to get a written mandate from one of the parties appointing you as your legal representative in find the right match.
Once you have your legal mandate in place make your move in finding the right buyer or seller according to the case. From your past experience you might already have some leads which you can further explore for this deal otherwise internet can prove to be a useful tool here. You can visit and register with various B2B websites which offer a platform where buyers and sellers can meet. I am sure there you will find no shortage of matches you are looking for but now it is up to your skills to weed out the unwanted and fraudulent matches. It is very important that you do not pass on the details of any buyer or seller without scrutinizing them to your mandate provider. In case your recommended matches come out to be fake ones it will create a negative impact of your ability get the right match.
One your scrutinizing process is over you can forward the right match with necessary documentation to your mandate provider and seek their inputs on how to proceed on them. Direct meeting with some of the matches could be the next step to clinch a deal. You may earn a success fee or a pre agreed commission on successful completion of business.
Will Brent-WTI Spread Dry Away?
Brent is an index for crude oil which represents the average daily prices of trading based on based on 21 days BFOF market in relevant delivery month. Most of the European and Asian market deliveries are based on Brent price index. Whereas on the other hand West Texas Intermediate which is more popularly known as WTI is American benchmark for crude prices. Traditionally there always has been a gap or a spread between the two indices which is characterized by regional economic influence.
Can High Oil Prices Derail Growth of an Economy?
Crude is one of the most important commodities purchased by all the countries around the world without exception. Due to its characteristics and ability to fuel economy and growth of a country it has become the most sort after thing in the modern world. Right from a common man and to most advanced institutions of a country each one has its share of requirement to consume oil. Most of the countries in world have to depend upon imports to meet their requirement of crude.
Why Many Facilitators Fail With a Crude Oil Business
Facilitators are present in most of the trading businesses and also have proven their worth for centuries. Facilitators perform certain important functions in a trade cycle so that it functions smoothly. Often they are aware of the best deals in the market and can help someone new in the business to survive and consolidate. However facilitator requirements for crude oil trading business are more advanced and unique.
