United States Oil Fund
In the last two parts in this series, we analyzed the best and worst performing midstream MLPs on Wednesday, August 26. 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) rose 0.31% yesterday. USO tracks the daily movement in WTI (West Texas Intermediate) light crude oil. In yesterday’s trade, WTI crude oil for September settled $0.71 lower, or 1.81%, at $38.60 per barrel as gasoline stocks rose more than expected. The upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 3.02% yesterday.
Most upstream MLPs, that have already lost significant market value since the rout in the energy prices, rose yesterday despite the fall in crude oil prices. The top upstream MLP gainers include LRR Energy (LRE), Vanguard Natural Resources (VNR), Eagle Rock Energy Partners (EROC), and BreitBurn Energy Partners (BBEP). They rose 20.43%, 13.29%, 9.65%, and 8.46% yesterday, respectively. LRR Energy and Eagle Rock Energy Partners have moved in tandem with Vanguard Natural Resources since their merger announcement. Traders take advantage of any discrepancy in the prices that are dictated by the swap ratio.
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 0.23%.
Alerian MLP ETF
The Alerian MLP ETF (AMLP) is comprised of 25 midstream energy MLPs. It rose 1.74% yesterday. AMLP underperformed the SPDR S&P 500 ETF Trust (SPY) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) by 2.10 percentage points and 1.26 percentage points in yesterday’s trade, respectively. SPY tracks the broader S&P 500 Index. It rose 3.84% yesterday. AMLP has returned -19.92% YTD (year-to-date), while SPY fell 5.39% over this timeframe.
For more company and industry analysis on MLPs, visit Market Realist’s Master Limited Partnerships page.