Month: November 2018

Midstream was negative 3 of the 4 days this week and finished down around 3.0% overall, beating the S&P 500 slightly, despite another oil rout.  Canada’s low beta helped the AMNA outperform the AMZ and AMUS this week.  Oil prices were down for a 7th straight week, down 33% from the peak October 3rd, after the latest black Friday. The Alerian MLP Index is down just 12.2% over that time, much better than XLE, the energy sector ETF.  The AMNA has done even better.  Short-term relative outperformance is hard to get excited about, but it’s better than the alternative.

It was a largely uneventful, unremarkable week in midstream.  Stock prices swung around with sentiment around oil and broader equities.  Canadian midstream again held up better in a negative tape, resulting in slightly better performance for the Alerian Midstream Energy Index vs. the AMZ or the AMUS.

Given the relative calm for midstream transactions, it’s a good week to talk midstream benchmarking.  As discussed at length here and in more formal whitepapers, MLPs aren’t as dominant in the midstream business as they once were.  Tracking performance of the midstream sector, therefore, is no longer as easy as tracking the Alerian MLP Index.  A new benchmark is needed.

Midstream traded up this week, participating pari passu with the broad rally in utilities and broader equities.  Midstream earnings were impressive again (especially ET, LNG and TRGP), the Colorado Proposition 112 was voted down, and natural gas prices spiked.  Those positive factors helped midstream trade well in the face of deteriorating oil prices.

Midstream was positive this week, led by non-MLP midstream stocks, which outperformed MLPs (AMNA +1.2% vs. AMZ -0.3%).  Midstream slightly outperformed utilities (UTY -0.8%), helped by a bounce back in broad equities and a strong set of 3Q results from big midstream players.  Midstream performance was impressive given the precipitous decline in oil prices this week, a 14 bps increase in the U.S. 10-year yield.  Midstream also had to contend with seasonal ex-date volatility and month-end window-dressing immediately ahead of an election week.