Starting an Oil Brokerage

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Learn something new every day More Info An oil broker is a paid intermediary who arranges transactions involving the purchase and sale of crude oil. In most instances, brokers are licensed securities traders and some brokers work at market exchanges while others conduct remote trades over the telephone or the internet.

As with most brokers, many of the people involved in oil trading have college undergraduate degrees. Investment companies often recruit college graduates who completed degree programs in topics such as finance to work as brokers. Some companies tend to hire people who have completed post-graduate degree programs in mathematics related topics since these individuals should be capable of making quick calculations involving large sums of money and big quantities of oil. In other instances, brokers are high school graduates who rose how to be an oil broker the ranks of an investment firm after performing well in more junior how to be an oil broker related roles.

Typically, brokers have to attend regulatory training classes and then pass a securities licensing examination before they can begin trading. Regardless of academic credentials, an oil broker must have good sales and organizational skills. Energy firms ship crude oil to refineries where impurities are removed and the finished product can then be sold to companies that convert the oil into gasoline, diesel or even plastic products.

An oil broker representing a refinery or an energy producer must find a buyer that is willing to purchase the refined oil. Like any sales agent, these brokers attempt to negotiate the best deals for their clients which means that brokers representing sellers always try to sell the oil for a high price.

Manufacturing firms and companies that operate gas stations also employ brokers and these brokers attempt to negotiate the lowest possible price for the oil. In some instances, the price paid during an oil trade is based upon supply and demand as buyers are unwilling to pay more than the going rate for commodities.

Many trades involve futures contracts in which case the two parties arrange a deal whereby the seller agrees to sell barrels of oil to the buyer for a set price at a specific date in the future. Buyers use futures contracts to lock in low prices when the cost of the commodity seems set to rise.

Sellers favor futures contracts when oil prices seem likely to drop. No one can accurately predict price movements in the commodities market, so futures trades are quite how to be an oil broker one party may have a negative or bearish view how to be an oil broker price movements while the other party may have a bullish or positive opinion. Like other securities traders, an oil broker is paid on commission. Additionally, many brokers supplement their earnings by investing their own money into the oil market.

These brokers use their knowledge of the industry how to be an oil broker try and make money by buying and quickly selling barrels of oil without ever having to take possession of the commodity. Brokers who generate money in this manner are commonly referred to as speculators.

One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from how to be an oil broker few hours to a few days. Thank you for helping to improve wiseGEEK! View slideshow of images above. Watch the Did-You-Know slideshow. Shereen Skola Last Modified Date: The average American throws away about 80 lbs 36 kg of clothes every year, amounting to 14 million tons of waste.

This Day in History. The Civil War began. You might also Like. How do I Become a Derivatives Broker? What is Helichrysum Essential Oil? What are the Different Commodities Trading Jobs? What is a Futures Broker? Discuss how to be an oil broker Article Post your comments. Please enter the code: Login username password forgot password? Register username password confirm email. Explanation of your recommended changes.

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Learn something new every day More Info An oil broker arranges contracts for the purchase or sale of crude oil, or negotiates future's contracts. In order to become an oil broker an individual must typically graduate from high school and complete an undergraduate degree program. Additionally, due to the nature of the work many firms require applicants for these roles to have prior sales or finance related experience.

In many locations, someone wishing to become an oil broker may also have to pass a series of licensing examinations. While the price of a barrel of oil can change throughout the day, transactions involving oil future's contracts are more complex because the sales prices in the transactions are based upon projections of future price movements.

Consequently, anyone who plans to become an oil broker must have a good grasp of mathematics and the ability to process significant amounts of information within a short period of time. Many firms attempt to fill these roles with college graduates who have completed degree courses in finance, economics or related topics.

Some companies even require applicants for these jobs to have completed masters or doctorate degree programs in mathematics related topics. The trading of oil and other types of commodities is heavily regulated in many areas and anyone wishing to become an oil broker must attend a series of training classes during which sales practices, disclosure requirements and securities laws are taught.

Generally, the process ends with an examination; prospective brokers must achieve a minimum score on this test in order to become eligible to apply for a trading license. The qualified applicants may then have to pass a background-screening test before seeking employment.

Successful brokers need to have strong sales skills; many firms prefer to fill these positions with workers who have previously worked in insurance, banking or stock trading. In many nations, oil trading takes place at commodities exchanges and only the leading brokerage firms and independent traders have the right to transact at these locations.

Someone wishing to become an oil broker may have to spend some time working at another type of commodity exchange , as many investment firms only hire brokers who have previously worked in these types of environments.

In the absence of such prior experience, someone who worked as an administrative assistant or sales associate for a trader may be able to apply for one of these roles. Aside from academic credentials and experience, brokers often need to have certain other skills and attributes.

Trading in many areas is mostly conducted online in which case some firms only hire people who have completed short-term computer training classes. Additionally, people who deal with oversees clients may need to have second language skills. One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days.

Thank you for helping to improve wiseGEEK! View slideshow of images above. Watch the Did-You-Know slideshow. Shereen Skola Last Modified Date: How do I Become a Derivatives Broker? What is Helichrysum Essential Oil?

What is a Futures Broker? Discuss this Article Post your comments. Please enter the code: Login username password forgot password?

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