A stupid question about oil.. Don't judge me if this makes me sound like a moron

[cola]

So oil is at historic lows right? But we all know that's temporary. What's to stop a common man like me or you from buying oh let's say 1000 barrels of oil, storing them and flipping them in 6 months for potentially double?
Assuming you had the land/space to store them?

 

[Vice]

Think about paper oil, not physical oil

 

[Billtx49]

So oil is at historic lows right? But we all know that's temporary. What's to stop a common man like me or you from buying oh let's say 1000 barrels of oil, storing them and flipping them in 6 months for potentially double?
Assuming you had the land/space to store them?

Oil is a great buy right now, but think the Futures market, 18 year low or better, don’t buy in a physical sense. It’s price is in what’s called contagion, i.e., they can’t hardly give it away now, but, the further out you buy it, the more expensive it is.…

The way to play this is if you can guess price and time coinciding together, the tricky part, is via a dated due Option or a more risky Future and buy now ahead of time at a lower price and sell higher later.

 

[Who Dares Win]

I believe what op meant was buying physically barrels of oil and keep them in his garage and then sell them to some manufacturer once the price goes up.

He wasnt really asking how to take advantage of that from a financial point but more of a microeconomical one.

Cola I cant really answer in a doubtless way but what you should need to consider are the costs to get in from the soil (unless you have drills in the mid east), the costs to trasport it to your location and the costs to store it in a place of your property.

Even if you were able to buy barrels at the local market and have them delivered to your garden it will still be very expensive since unlike oil companies you do not have the logistics nor the infrastructures to do so, also you surely dont have lobbists working for you at the gov so you would be paying a **** load of taxes.

I dont know also if there are laws that require a special authorization to deal in that business.

So to answer your question I would say: 1 infrastructures, 2 logistics, 3 taxes, 4 bureaucracy.

Anyway interesting question, lets see if someone can provide a more precise answer.

 

[Spaz]

Companies that you see transport oil (those truckers that displays Shell or ExxonMobil signage are actually vendors) are the ones buying oil and then reselling it to petrol stations, industrial factories and airports.

If you want to buy physical oil, discuss it with them.

The alternative is futures trading in oil.

 

[Medina]

Where on earth are you going to keep a 1000 barrels of oil

Also what Who Dares said but just to add the environmentalism is probably a sh!t storm too

 

[Bible_Belt]

The thing about historic lows, when it then goes even lower, those previous lows are no longer historic, but rather rather merely previous.

 

[sosousage]

but you mean the frying oil?

 

[Ohso-Phresh]

So oil is at historic lows right? But we all know that's temporary. What's to stop a common man like me or you from buying oh let's say 1000 barrels of oil, storing them and flipping them in 6 months for potentially double?
Assuming you had the land/space to store them?

Nothing except the ability to store. That's the issue atm, is that the world is producing more than it's current storage capacity.

 

[Billtx49]

The whole concept on this thread about barrels of oil is false. I believe an oil barrel is 42 gallons, but the word barrel today is only a volume measurement. Crude goes everywhere via pipeline or tanker in bulk. It’s never put into barrels, only into large temporary holding tanks…
To my knowledge the refinery outputs of gasoline, jet fuel, or heating oil are not usually barreled either, but some refined industrial use solvents and chemicals are in 55 gallon drums or smaller for retail containers…

 

[Billtx49]

I've never seen an actual "barrel" of oil, so you're probably right...which would extremely limit the storage options for most traders, even those with empty warehouses.

Yep, the work involved and two way transit costs combined with barrel cost plus storage overhead would make a small level physical storage operation a financial loss…

 

[BeTheChange]

What stops you is that you're only legally allowed to store barrels of oil in specific places (like an oil tanker).

You can't just buy an oil contract, wait for delivery and then store the barrels in your back garden.