Stages of Crude Oil Trading: A Trader’s Point of View - PowerPoint PPT Presentation

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Stages of Crude Oil Trading: A Trader’s Point of View

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crude oil trading in singapore remains robust as the products continue to be shipped all over the world. – PowerPoint PPT presentation

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Date added: 10 September 2019
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Title: Stages of Crude Oil Trading: A Trader’s Point of View


1
Stages of Crude Oil Trading A Trader's Point of
View
2
Trade Agreement
The trader agrees to buy oil from an oil major
loading and to sell the oil cargo to a refinery.
The process takes place in 41-45 days and 101-105
days, respectively.
3
Price Agreement
The Oil major issues an invoice to the trader and
indicates when the trader must lift the oil. For
most transactions, a Letter of Credit (LC) is
issued by the applicants bank.
4
Loading
The commodity being financed by the LC is
labelled as security and the LC gives credit to
the trader. Hence, the creditworthiness of the
buyer is backed by that of the Bank and the oil
cargo itself will serve as the collateral.
5
During this stage, the following will also take
place
The trader nominates a tanker who will lift the
stem in the loading sequence. The seller draws
down the LC, which is then converted into a
secured loan from the bank that issued the LC.
6
Transportation
The loan is marked to market on a weekly basis
until it reaches maturity. This is to make sure
that the amount being financed corresponds to the
value of the commodity.
7
Delivery
Finally, the trader issues invoice to the
refinery, which is then securitised.
8
Ocean Energy is an oil trading company in
Singapore that offers crude oil, petroleum
products, and petrochemicals among others.
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