Very Mixed Reactions to Saudi-Attack Oil Price Spike in Transportation Stocks

September 16, 2019 by Jon C. Ogg

The weekend attacks on Saudi Arabia’s oil production and infrastructure have created major moves in the markets. After all, Saudi Arabia has close to 10% of global production, and roughly half of its capability has just been sidelined due to damage.

While the major and leveraged oil stocks have all seen major gains on Monday, there has been a very mixed bag in the transportation stocks. 24/7 Wall St, has tracked move in 12 of the top transportation stocks with prices based on a snapshot after the first 30 minutes of trading. It turns out that the move has not been as painful as some may have guessed.

These stocks include airlines, shippers, truckers and so on. These companies have the most direct exposure to oil and gasoline prices, or related areas, because it is the largest unfixed price that comes into play on pricing.

One issue helping the sector is that crude oil futures are not as crazy as they had been after President Trump said he would authorize the release of crude oil from the Strategic Petroleum Reserve if and when needed to make up for any shortfalls. Another issue is that geopolitical uncertainty, at least of this sort (and not of the U.S./China trade war sort), historically has not been able to hurt global trade, and transporters get to pass on surge pricing around oil and they get more pricing power.

The oil futures market is also very much in backwardation, where the current 9.3% gain to $60.35 per barrel (up almost $5.55 from Friday) is higher than the anticipated spot price at maturity: NOV/19 $60.17; DEC/19 $59.63; JAN/20 $58.90; MAR/20 $57.54; and JUN/20 $55.85.

American Airlines Group Inc. (NASDAQ: AAL) was down the most of the airline stocks, with a drop that was still over 5.9% lower at $28.18 after the first 30 minutes of trading.

CSX Corp. (NYSE: CSX) was down just 0.3% at $72.25.

Delta Air Lines Inc. (NYSE: DAL) was down 2.7% at $58.39.

FedEx Corp. (NYSE: FDX) was up 0.2% at $174.45.

J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) had opened down at $114.38, after a $114.96 close on Friday, but it was up four cents at $115.00 after the first 30 minutes of trading.

Knight-Swift Transportation Holdings Inc. (NYSE: KNX) was down 1.9% at $35.52.

Kirby Corp. (NYSE: KEX), which operates tank barges and caters to the energy and chemicals markets, was up 2.3% at $84.80.

Nordic American Tankers Ltd. (NYSE: NAT), a taker and shipper with Suezmax ships, was up 1.9% to $2.09.

Southwest Airlines Co. (NYSE: LUV) traded down just 0.55% at $55.48.

Union Pacific Corp. (NYSE: UNP), the largest of the rail operators in the United States by market value ($121 billion) was down 1.4% at $168.99.

United Airline Holdings Inc. (NYSE: UAL) was down 2.8% at $88.78.

United Parcel Service Inc. (NYSE: UPS) traded up just over 0.1% at $122.85 a share.


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