Oil brokers are commodities brokers who match buyers and sellers of crude oil. Many brokers buy and sell oil futures on a commodities exchange, such as the New York Mercantile Exchange, which is an open-outcry trading floor, or Intercontinental Exchange, which is digital. Others, however, communicate directly with oil companies to buy crude for immediate delivery. While there are a number of different paths to become an oil broker, most follow a similar route.
- Skill level:
Get an education. Most oil brokers have a background in business or finance in a course of study with particular applicability to commodities trading or the energy industry. While some oil brokers hold degrees that focus on the trading aspect of the profession, such as a degree in economics, others concentrate on the oil industry, such a s a degree in energy management.
Find employment. To pass the exams necessary to become a commodities broker, you must first find a company registered with the Financial Industry Regulatory Authority (FINRA) willing to sponsor your application. While you may later choose to strike out on your own, all U.S.-based oil brokers must begin work with a company.
Apply to FINRA. Oil brokers must fill out the Form U-10 application to take the Series 3 National Commodities Futures examination. The fee to take the exam, as of 2010, is £68. Applicants must also complete paperwork specific to the Series 3 exam. To be approved to take the exam, you will first undergo a background check.
Pass the test. After being approved to take the exam, potential oil brokers must complete the test. The test is 120 multiple choice questions covering the commodities market and customer service laws and examinees are given 2.5 hours to complete the test. Certain individuals who have passed other FINRA exams, such as Series 31 and 32, may not have to take for the test. Test-takers must receive at least a 70 per cent score to pass.
Make contacts. After passing the exam, most oil brokers go to work for their sponsoring firms. However, those that choose to strike out on their own will have to assemble a pool of clients, both buyers and sellers, for whom to arrange crude oil trades.
Tips and warnings
- The oil industry is an international business, and not all countries have the same requirements that the U.S. does for brokers. If you are unable to complete the FINRA requirements, consider working for an offshore firm.
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