Hello folks,

Oil is a commodity.

Its rumored that speculators or investors are causing it.

Is it legal to :

> setup a company and buy oil in bulk and keep it somewhere cheap. Given that oil price will continue to go up, would it be legal to keep buying oil but hold it,  as in not to sell it until a later time when the price is even much higher , and profit from it?

> gather as many investors as possible, collectively buy as much oil as possible. Keep for sometime until the supply is showing problem?

I mean, if the rumored investors can get away with doing that and seems that nothing can be done about price speculation and investors, can I say that it is legal or can get away with this?

Pls let me know what you think about this idea.

thanks!

B_E_C

Im sure its legal but the execution of such a business proposal is financial unfeasible as the costs of doing so outweighs the benefits. Here are the reasons why:

1) You do not have the proper storage facilities and technical know-how to conduct proper oil storage. Keeping oil in its barrelled from requires regular maintanence as it is after all a flammable and hazardous commodity. What about rental costs of a factory and the respective costs of hiring respective manpower?

2) In Singapore, im sure you need a permit to do so. How long would you need to apply for it and for how long does it take for you to be granted one, given the protectionist policy of our governement towards the oil industry?

3) Assuming you get points no. 1) and 2) right, what about your sources? Its definite that you would be purchasing oil at its already lofty market price and even paying more for it if your unlucky. Upon doing so, what about the costs of import tax, duty tax and the relevant logistical and transportation costs?

The relevant costs as stated above makes your proposal excessively risky and outweighing the potential benefits if any, assuming oil price DOES continue to rise. Probably oil will have to hit USD$200 for you to break-even and hit it fast before your creditors come knocking.

These rumoured speculators participate in the upward price movement of oil through speculation of oil related derivatives. Such future contracts would normally include the barrels of Brent Crude Oil and North Sea Sweet Crude as the underlying asset. Its highly unlikely that they(the speculators) would hoarde oil in its physical form and thus create an aggregate supply shock to the world economy.

Originally posted by balance_else_complacent:

Hello folks,

Oil is a commodity.

Its rumored that speculators or investors are causing it.

Is it legal to :

> setup a company and buy oil in bulk and keep it somewhere cheap. Given that oil price will continue to go up, would it be legal to keep buying oil but hold it,  as in not to sell it until a later time when the price is even much higher , and profit from it?

> gather as many investors as possible, collectively buy as much oil as possible. Keep for sometime until the supply is showing problem?

I mean, if the rumored investors can get away with doing that and seems that nothing can be done about price speculation and investors, can I say that it is legal or can get away with this?

Pls let me know what you think about this idea.

thanks!

B_E_C

 

 

You need to 1st of all open a Pte Ltd with capital of SG$ 2 million to apply for license to import n export oil.

At the same time, your competitors will be the giant MNC where your price will not be as competitive as them. They have the financial capacity to buy and hold stock sometimes more than millions or billions. They have holding space to keep and maintain the stock as they are highly flammable.

Another thing is the buyers. They usually dun from supplier without portfolio or clear background. Every process is done in high security.

The ones who control the price is a level that most average citizens are unable to enter or even participate.

Some who are able to do it, as they used to be from the industry and with contacts, they can tagged on to their supplier or clients.

Unless you are thinking of buying in barrels and illegally supply to car owners?

Originally posted by stormax:

You need to 1st of all open a Pte Ltd with capital of SG$ 2 million to apply for license to import n export oil.

At the same time, your competitors will be the giant MNC where your price will not be as competitive as them. They have the financial capacity to buy and hold stock sometimes more than millions or billions. They have holding space to keep and maintain the stock as they are highly flammable.

Another thing is the buyers. They usually dun from supplier without portfolio or clear background. Every process is done in high security.

The ones who control the price is a level that most average citizens are unable to enter or even participate.

Some who are able to do it, as they used to be from the industry and with contacts, they can tagged on to their supplier or clients.

Unless you are thinking of buying in barrels and illegally supply to car owners?

 

 

Not to mention that you would have to hire people to do maintenance on your tanks, check for leaks, water-drawoff before shipment, send your product for lab tests etc.

Also, are you aware of the 'dark' trade secrets of oil trading regarding Specific Gravity, Vcf and Temperature during shipping ?

you're better off entering a futures contract

Originally posted by Paradise Lost:

Im sure its legal but the execution of such a business proposal is financial unfeasible as the costs of doing so outweighs the benefits. Here are the reasons why:

1) You do not have the proper storage facilities and technical know-how to conduct proper oil storage. Keeping oil in its barrelled from requires regular maintanence as it is after all a flammable and hazardous commodity. What about rental costs of a factory and the respective costs of hiring respective manpower?

2) In Singapore, im sure you need a permit to do so. How long would you need to apply for it and for how long does it take for you to be granted one, given the protectionist policy of our governement towards the oil industry?

3) Assuming you get points no. 1) and 2) right, what about your sources? Its definite that you would be purchasing oil at its already lofty market price and even paying more for it if your unlucky. Upon doing so, what about the costs of import tax, duty tax and the relevant logistical and transportation costs?

The relevant costs as stated above makes your proposal excessively risky and outweighing the potential benefits if any, assuming oil price DOES continue to rise. Probably oil will have to hit USD$200 for you to break-even and hit it fast before your creditors come knocking.

 

These rumoured speculators participate in the upward price movement of oil through speculation of oil related derivatives. Such future contracts would normally include the barrels of Brent Crude Oil and North Sea Sweet Crude as the underlying asset. Its highly unlikely that they(the speculators) would hoarde oil in its physical form and thus create an aggregate supply shock to the world economy.

What you said are valid concerns. Do business here may not be as easy as one may think for many reasons.

I think there is virtual warehouse concept. Have you thought about it?

Not a single drop of oil involved. Only digits.

Just like playing commodities on stock market. Alas, I no no much about stock market lah. Only layman layman onlyz.

But you should have gotten what I mean right?

Originally posted by stormax:

You need to 1st of all open a Pte Ltd with capital of SG$ 2 million to apply for license to import n export oil.

At the same time, your competitors will be the giant MNC where your price will not be as competitive as them. They have the financial capacity to buy and hold stock sometimes more than millions or billions. They have holding space to keep and maintain the stock as they are highly flammable.

Another thing is the buyers. They usually dun from supplier without portfolio or clear background. Every process is done in high security.

The ones who control the price is a level that most average citizens are unable to enter or even participate.

Some who are able to do it, as they used to be from the industry and with contacts, they can tagged on to their supplier or clients.

Unless you are thinking of buying in barrels and illegally supply to car owners?

No lah just talk cork sing song on a sunday afternoon onlyz lah. I super kuai wan. I dare not do illegal stuff. I scared like hell to do that.

Would you agree that the Rich will get Richer as the poor can not compete on level playing field with them? This is only a question.

For me, I dare not say what I think for fear for my life.  I kiasi and kiasu and kiasai wan. you know why right? kekeke...