Why MLPs Ended the Week Flat despite a Strong Crude Oil Rally
MLPs were sluggish last week
The Alerian MLP Index (^AMZ), a capital-weighted index that tracks the performance of 50 energy infrastructure MLPs, was almost flat last week despite the huge gain in crude oil prices. Crude oil prices surged 8.6% last week, driven by bullish inventory data. For more details, read US Crude Oil Inventories Fell below the 5-Year Average.
MLPs’ sluggish performance last week could be attributed to weakness in natural gas prices and a crude oil production decline for the first time in four weeks. Natural gas prices fell 1.0% last week. MLPs’ throughput volumes are directly linked to natural gas and crude oil production growth.
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Among the top MLPs by market capitalization, Enterprise Product Partners (EPD) fell 0.8% while Energy Transfer Partners (ETP), Plains All American Pipelines (PAA), and Williams Partners (WPZ) rose 3.2%, 1.5%, and 0.6%, respectively. The Alerian MLP ETF (AMLP), which comprises 25 energy MLPs, rose 0.7%. AMLP underperformed both the Energy Select Sector SPDR Fund (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which rose 2.1% and 3.7%, respectively.
The Alerian MLP ETF (AMLP) had a net outflow of $14.9 million for the week ended July 28, 2017. On the other hand, the First Trust North American Energy Infrastructure Fund (EMLP) received $1.3 million inflows during the week.
In the next two parts of this series, we’ll look into the top MLP gainers and losers last week, followed by last week’s earnings wrap-up and ratings updates.