How US Industrial Firms Are Affected By Oil Price Decline?

There is a continuous decline in the prices of oil. It is expected knowing that supply exceeds demand. According to Thomson Reuters research, while it is true that the US energy sector benefits in this sharp oil prices fall, investors coming from different sectors should not expect the same.

There are retailers that show positive results right after the decrease in oil prices. On the other hand, most companies in the materials and industrial sectors tend to report declining results even with the decline in energy and oil prices. Thomson Reuters research even found out that even the airline industry, which is expected to benefit from energy and oil prices fall, show little or no correlation between their results and the decline in energy and oil prices.

Thomson Reuters focused at the relationship between the yearly crude oil change and the Russell 3000 companies’ quarterly net income. It found out that crude decline reflects weaker results for both energy and industrial names. The median correlation between crude oil and the net industrial income is 0.26 percent. This means that the two have positive relationship, which implies that when the one falls, without a doubt, the other one will also experience a decline.