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.
Crude Oil business has high stakes, involved both in terms of monetary requirements and incidental losses due to non compliance of sale deed. This nature of business requires more mature approach on part of the Facilitators of agents involved in this business. We will further study a few important reasons why facilitators involved in this business are not able to do well.
Lack of Experience and knowledge: Many people are attracted into this business because of kind of money one can earn on account of successful deals. Many agents fail to understand that requirements to succeed in this business are very demanding. Only those who have years of hands on experience and through knowledge of the industry can strive to do well as middle-men. Anyone thinking of making quick bucks getting involved with crude oil business may not do that well.
Many middlemen getting involved: Often it is observed number of middlemen get involved in a single deal and all of them have their own interest to protect. Often main focus of their business is changed from ensuring a smooth deal to protecting their own share of fee or commission. Also as the saying goes "too many cooks spoil the broth", too many middle men getting involved in the deal often creates confusion and focus is lost.
Working without a legal Mandate: It is very important in order to succeed as an agent in oil trading business one must have clear mandate from either a genuine buyer or genuine seller. This mandate may be non-exclusive in nature but still having a mandate will mean that you have at least one strong end. Your efforts will be better rewarded only in the where you will have this mandate otherwise your jobs becomes very difficult and changes of success very dim.
Clarity with Buying and Selling Procedures: The agents must be well aware of all the procedures involved in sale of crude. Lack of knowledge or clarity in these procedures can create serious problems and can cause a deal in making to fizzle out.
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.
Get Associated With Crude Oil Business As a Facilitator
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.
