Beginners Information To Crude Oil Trading Business
Trading in crude oil and its derivative products has always been a lucrative business as it is a seller’s market. Which petroleum refining water wastewater use and management 6th edition means the market is dominated and dictated by the seller’s lobby moderately than buyers. So promoting the product just isn’t all the time the troublesome part relating to buying and selling crude oil. At the same time getting allocation of the products still stays most tough half with excessive entry limitations.
Many of the oil traded in open market is from OPEC (Organization of Oil Producing & Exporting Countries). More specifically the Nigeria National Petroleum Corporation, commonly known as NNPC, sells most of its stocks in the open market. Now the massive question is how to get allocation from NNPC You should have following in order to stand petroleum refining water wastewater use and management 6th edition a chance of getting allocation from this authorities company:
Funds: You should have funds in excess of $ 100 Million and present Proof of those funds (POF) to NNPC.
Efficiency Bond: Apart from the above funds you should also furnish a performance bond of at the least 1% ($ 1 million) of the above quantity.
Aside from the above two, you might be expected to be a neighborhood or an international oil refinery. If you are none of those then you have to be no less than a famend trader in Oil business.
In case you can’t qualify below the above standards’s, there another means to procure Oil. Now you can choose to purchase from the individuals who get the allocation from NNPC, nevertheless you’ll to pay a premium above the NNPC’s sale value.
Once you have identified the procurement source of the oil you may move further to take the possession of the cargo. The two commonest ways to purchase crude oil is both through TTO (Tanker Take Over) or TTT (Tanker To Tanker) basis. At times offers are additionally made on CIF (Carriage Insurance coverage & Freight) and FOB (Free on Board) basis, however TTT and TTO remain the two most generally accepted methods to trade crude oil.
Having taken the possession of the cargo you might be presented by two selections. You possibly can decide to retailer the cargo at a tank terminal and later sell it as a break bulk cargo if a worth hike is anticipated. To keep your risk to minimal, you may as well choose to sell your entire cargo in a single go; nonetheless your income margins on this case shall be diminished. As soon as may also select a combination of those two to balance out threat and revenue ranges.