In the last two parts in this series, we analyzed the best and worst performing midstream MLPs on Tuesday, August 18. To put those movements into context, we’ll analyze the performance of energy-related ETFs and upstream MLPs on the same day.
Nearly all upstream MLP stocks fell yesterday as the EPA (Environmental Protection Agency) proposed new rules to cut greenhouse gas emissions, especially methane for the oil and natural gas industry. According to the EPA, “The updates would add methane to the pollutants covered by the rule, and would add requirements to limit emissions from hydraulically fractured oil well completions and pneumatic pumps, in addition to requirements for detecting and repairing leaks at oil well sites.”
Cash-strapped upstream MLPs will have to manage the additional cost of regulations to comply with the EPA’s new standards. The biggest losers among upstream MLPs are Legacy Reserves (LGCY), Atlas Resource Partners (ARP), LRR Energy (LRE), and EV Energy Partners (EVEP). They fell 11.36%, 5%, 4.34%, and 4.21%, respectively.
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 0.76% yesterday.
United States Oil Fund
The United States Oil Fund (USO) rose 1.15% yesterday. USO tracks the daily movement in WTI (West Texas Intermediate) light crude oil. In yesterday’s trade, WTI crude oil for September settled $0.57 higher, or 1.80%, at $42.62 per barrel. For context, the upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 0.36% yesterday.
Alerian MLP ETF
The Alerian MLP ETF (AMLP) is comprised of 25 midstream energy MLPs. It fell 0.54% yesterday. AMLP underperformed the SPDR S&P 500 ETF Trust (SPY) and XOP by 0.90 percentage points and 0.25 percentage points in yesterday’s trade, respectively. SPY tracks the broader S&P 500 Index. It fell 0.29% yesterday. AMLP has returned -16.21% YTD (year-to-date). SPY rose 2.16% over this timeframe.
For more company and industry analysis on MLPs, visit Market Realist’s Master Limited Partnerships page.