Tag: ARCHIVE

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.

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.