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Railcars Are The New Oil-Storage Space

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The U.S. is so awash in crude oil that traders are experimenting with empty railcars as new places to store it, Nicole Friedman and Bob Tita report. Thousands of railcars ordered to transport oil are now sitting idle because low crude prices have made shipping by train unprofitable. At the same time, traditional storage tanks are running out of room as U.S. oil inventories swell to their highest level since the 1930s. So the railcars provide a form of “rolling storage.”

Still, the use of railcars for storage could be limited by the cost of track space and safety and liability concerns that have followed a string of high-profile transport accidents. Railroads and users face responsibility for leaks, collisions or other mishaps.

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The tumble in oil prices continues to cause producers to cut back operations, but investors are wondering when those cuts will lead to a significant oil output decrease, Christian Berthelsen reports. The U.S. Energy Information Administration’s estimates of U.S. oil production have fallen only 6% since their peak last April.

HIGH-DIVIDEND STOCKS GAIN APPEAL

Investors are dumping shares in fast-expanding industries such as technology and turning to companies like utilities that pay hefty dividends, as the investors lick their wounds and search for stability, Gregory Zuckerman and Aaron Kuriloff report.

Some of the better performers in the S&P 500 this year include companies paying annual dividends of about 4% or more as a proportion of their share price. Top gainers include electric utility Public Service Enterprise Group Inc., up almost 10%. Some investors have shifted to utilities and other blue-chip companies that are seen as having safer dividends, and the S&P Utility Index is up 6.7% in 2016, including dividends.

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Meanwhile, some multinational companies operating in Belgium may shift part of their business out of the country after the European Union declared a tax scheme illegal and is requiring the companies to pay back hundreds of millions of euros in unpaid taxes, Natalia Drozdiak and Matthias Verbergt report. Among the largest beneficiaries of the tax scheme is BP PLC.

In Malaysia, state oil company Petroliam Nasional Bhd reported a fourth-quarter loss and announced spending cuts amid low oil prices, Reuters reports.

MARKETS

Global oil prices were mainly flat on Monday, as investors looked for direction and waited for news on a possible oil-production freeze from several key producers.

Increased trade from speculators and money managers in recent weeks has made oil markets volatile. But, with few headlines over the weekend, those speculators appear to have stayed away, leaving markets calmer.


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