Category: MLPguy Post

Midstream rallied for a third straight week.  Both the AMNA and AMUS indexes have rallied 20% off the Christmas Eve bottom, while the AMZ is up 17.8% over the same period.  Oil and natural gas prices and the broader equity market were supportive of midstream gains this week.

Midstream had another big week, helped by recovering commodity prices and strong equity market backdrop.  Midstream (U.S. and Canada) fared better on average than MLPs this week, with the AMNA posting a 4.4% gain to catch and pass the Alerian MLP Index for the year so far. Midstream also outperformed utilities by a wide margin.

As this blog enters its 10th year of existence, let me provide an update on where we plan to go with this.  In 2019, nothing will change with regards to the timely weekly write-ups you all love.  Occasionally, however, I will sprinkle in a mid-week post that might include promotional language related to my day job at CBRE Clarion.  In addition to providing weekly free analysis on the MLP sector through my blog, I manage a midstream investment strategy and I contribute to the global team that manages a global infrastructure investment strategy on behalf of paying clients.

Midstream stocks and MLPs were up every day this week and finished with their best week since April 2016.  For the MLP Index it was the 8th best week all-time, and it only took them 4 trading days to do it.  Midstream outperformed the S&P 500 and energy stocks by a wide margin.

Monday to Monday, the AMNA was up 5.3% and recouped some losses for the month and save the sector from finishing with the worst quarter on record.  Midstream traded well, but underperformed strength in the S&P 500 (+6.6% since Christmas) and oil prices (+7.8%).  Below is a summary of midstream over the last 5 years.  Oil prices finished the year 24% lower, blowing it after calls for $100 oil over the summer.

It was a brutal week for stocks, and midstream stocks were trampled underfoot in the stampede for the exit.  Despite underperforming this week, midstream and MLPs (each down 10%) are beating the S&P 500 (-12.5%) for the month so far, which is of little comfort.

In a frustrating week for stocks in general, MLPs finished positive and midstream outperformed again.  Over the last two weeks, MLPs are down 1.1% and midstream is down 2.5%, compared with a 5.8% decline in the S&P 500.  Utilities are up 1.7% over those same two weeks.

It was a short, wild week to start December, with tons of macro action, sparked by tweets, arrests in Canada and OPEC hallway chatter.  Amidst all the volatility and noise, midstream outperformed the S&P 500 and energy stocks broadly.  Oil finished up for a second straight week and appears to have stabilized after OPEC and Russia delivered the goods.  With the OPEC uncertainty put to rest for now, sentiment on midstream appears to be firming.

Midstream traded up this week, but underperformed the best week for the S&P 500 in years. Of the three main buckets of North American midstream, U.S. midstream corporations performed best, MLPs worst. Midstream also underperformed utilities.  Midstream didn’t outperform much of anything, outside of oil and NGL prices.  Powell’s not hawkish comments on Wednesday sparked a broad market rally and a decline in interest rates.

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.