United States Oil Fund
In the last two parts of this series, we analyzed the best and worst performing midstream MLPs on Wednesday, August 19. To put those movements into context, we’ll analyze the performance of energy-related ETFs and upstream MLPs on the same day.
The United States Oil Fund (USO) fell 4.41% yesterday. USO tracks the daily movement in WTI (West Texas Intermediate) light crude oil. In yesterday’s trade, WTI crude oil for September settled $1.82 lower, or 4.30%, at $40.80 per barrel after an unexpected rise in crude stockpiles in a weekly report released by the EIA (U.S. Energy Information Administration). For context, the upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 3.75% yesterday.
Most upstream MLPs, that have already lost significant market value since the rout in the energy prices, ended in a bloodbath yesterday. They tracked the fall in natural gas and crude oil prices. Top upstream MLP losers include Eagle Rock Energy Partners (EROC), Vanguard Natural Resources (VNR), LRR Energy (LRE), and Linn Energy (LINE). They fell 16.08%, 13.83%, 12.93%, and 10.43% yesterday, respectively.
These stocks have lost 45.45%, 52.89%, 45.69%, and 60.06% of their market value since the beginning of this year. If crude oil prices continue to stay low, bankruptcy may be on the horizon for some of the highly leveraged upstream MLPs.
Upstream companies’ earnings are significantly tied to crude oil and natural gas prices. The United States Natural Gas Fund (UNG) tracks daily movements in natural gas futures. It fell 0.46% yesterday.
Alerian MLP ETF
The Alerian MLP ETF (AMLP) is comprised of 25 midstream energy MLPs. It fell 1.16% yesterday. AMLP underperformed the SPDR S&P 500 ETF Trust (SPY) by 0.37 percentage points, but outperformed the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) by 2.59 percentage points in yesterday’s trade. SPY tracks the broader S&P 500 Index. It fell 0.79%. AMLP has returned -17.18% YTD (year-to-date). SPY rose 1.35% over this timeframe.
For more company and industry analysis on MLPs, visit Market Realist’s Master Limited Partnerships page.