Midstream had another week of underperformance. MLPs gave up last week’s modest gains and more. The weakness had little to do with fundamentals. Oil prices rallied, and earnings results were strong overall, especially from ETP and Pembina. The weakness came from reminders of persistent structural headwinds: complicated simplifications (EQM this week), and stubbornly high leverage driving distribution cuts (MIC this week).
Month: February 2018
Week Thoughts: Roses are Red, Midstream is Green
MLPs finished positive for the week, but underperformed the rest of Midstream, the S&P 500, utilities, and oil prices. The broader energy infrastructure index (AMEI) traded better on the back of a strong week in Canadian Midstream and some of the larger U.S. Midstream Corporations.
Week Thoughts: MLPs Bleeding Green
More pain for midstream and MLP stocks this week. The negative factors from last week remained, but oil prices piled on this week. Oil prices are on a 6-day losing streak and broke below $60/bbl Friday. Stocks were volatile, and midstream/MLPs held up ok on a relative basis and have been a decent place to hide the last few weeks if you avoided the biggest losers in the group.
Week Thoughts: E-Brakes Slam Midstream
In a rough week for stocks of all kinds, energy stocks and midstream/MLPs stood out as particularly weak. The MLP Index declined 5.9%, including distributions, the first 5%+ decline week in nearly two years (since February 2016). The 10-year treasury rate rose another 17 basis points, and sits just 17 more bps from 3.00%. Oil prices held up well and propane prices were positive even as natural gas prices cratered.