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Oil trains sidelined by deepening slump in US shale

01.11.16 | Gregory Meyer, Financial Times

The amount of oil hauled on  US railways has declined steeply in the past year as refineries swallow more foreign supplies in the face of falling domestic crude output.

Tank cars, once feverishly ordered during the US shale boom, are sitting on sidings. Lessors are obtaining car rents 20-30 percent below early 2015 - "if you're lucky enough to keep your car in service", said James Husband of RailSolutions, a consultancy.

From a peak in January 2015 to last October, movements of crude by rail declined more than a fifth, the latest data from the US energy department show. Genscape, a research group, said rail deliveries to US Atlantic coast terminals continued to drop to the end of the year and the spot market for crude delivered by rail from North Dakota's Bakken region "is at a near standstill."

Once seen as a 19th century relic, moving crude oil by train re-emerged as a hot technology five years ago as surging output from long-neglected shale oil regions overwhelmed pipeline capacity. Investors from oil companies to Wall Street banks clamored for tank cars, while fiery accidents prompted federal regulators to impose more stringent standards on rolling stock.

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