MLPs Woes Continue on Crude Price Fall
MLPs woes continue last week
MLP (master limited partnership) weakness continued for the third-straight week of the month last week (ended August 18). The Alerian MLP Index (AMZ), a capital-weighted index tracking the performance of 50 energy MLPs, ended the week 3.7% lower. Out of the total of 96 MLPs, 79 ended in the red, while one ended flat, and only 16 ended the week in the green.
Among the other top MLPs by market capitalization, Plains All American Pipelines (PAA), Energy Transfer Partners (ETP), Enterprise Product Partners (EPD), and Williams Partners (WPZ) fell 6.8%, 6.4%, 2.6%, and 2.4%, respectively.
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The Alerian MLP ETF (AMLP), which consists of 25 energy MLPs, fell 3.4% last week. The ETF underperformed both the SPDR S&P 500 ETF (SPY) and Energy Select Sector SPDR Fund (XLE), which fell 1.5% and 2.5%, respectively.
MLP weakness last week was likely due to the weakness in crude oil prices. Publicly traded partnerships with high crude oil exposure were among the weakest. Crude oil fell below $47 per barrel, likely due to the rise in crude oil production. (For a recent look at crude oil prices, read Market Realist’s “How Crude Oil Could Fall to $40 per Barrel.”)
AMZ has fallen 9.9% since the beginning of this month due to the general pessimism in the energy sector, lower-than-expected earnings, current political uncertainty in the US, and the rise in geopolitical tension with North Korea.
MLP funds including the Alerian MLP ETF and the JP Morgan Alerian MLP Index ETN (AMJ) have continued to see net inflows, despite the recent weakness in the industry. AMLP had a net inflow of $43.3 million for the week ended August 18, 2017, while AMJ received $102.1 million inflows for the week.
In the next two parts of this series, we’ll look into the top MLP losers and gainers for the week ended August 18.