Crude oil hit its five year low price on Monday, Dec. 8, under pressure from growing production in the U.S. and the unwillingness of the Organization of Petroleum Exporting Countries to cut production. West Texas Intermediate, the U.S. crude benchmark, declined 4.3 percent to $63.05 per barrel and Brent crude, which reflects the global market, fell 4.2 percent to $66.10 per barrel.
Amid fears of a continuing decline in crude prices, railroad stock prices have also sunk. The Dow Jones U.S. Railroad Index, which is based on eight U.S. railroads, had gained 34.7 percent during the year through Nov. 26. However, following the news of the OPEC disagreeing on production cuts, the DJUSRR declined 7.4 percent through Dec. 8. Investors are clearly worried about the impact of the crude oil price decline on railroads. In this article we take a look at railroads’ crude oil shipments and assess whether crude prices may have an adverse impact on railroads’ volumes and revenue.
Read the complete story at Forbes.
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