Alerian MLP ETF
The Alerian MLP ETF (AMLP) is comprised of 23 midstream energy MLPs. It fell 6.35% yesterday due to the huge sell-off in the midstream sector. Investors dumped midstream stocks mainly due to the negative sentiments prevailing in the midstream sector. The sentiments came after the Energy Transfer-Williams merger announcement and the fall in natural gas future prices—indicating weaker natural gas demand for most of the spring.
AMLP underperformed the SPDR S&P 500 ETF Trust (SPY) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) by 6.41 percentage points and 7.14 percentage points in yesterday’s trade, respectively. SPY tracks the broader S&P 500 Index. It rose 0.06% yesterday. With yesterday’s loss, AMLP’s YTD (year-to-date) returns moved below XOP. AMLP has returned -34.30% YTD while XOP has returned -33.22% over the same timeframe.
United States Oil Fund
The United States Oil Fund (USO) rose 1.60% yesterday. USO tracks the daily movement in WTI (West Texas Intermediate) light crude oil. In yesterday’s trade, WTI futures settled 1.80% higher at $45.23 per barrel. For context, XOP rose 0.79% yesterday.
Most upstream MLPs, which have already lost significant market value since the rout in the energy prices, fell yesterday. They tracked the fall in natural gas prices. The top upstream MLP losers include Eagle Rock Energy Partners (EROC), Vanguard Natural Resources (VNR), LRR Energy (LRE), and BreitBurn Energy Partners (BBEP). They fell 10.45%, 8.90%, 8.27%, and 6.82%, respectively. For an in-depth analysis on the recent operating and market performance of the four largest upstream MLPs, read Tough Times: How 4 Upstream Energy MLPs Are Faring So Far.
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 3.18%. The natural gas contract for November delivery settled down $0.084, or 3.10%, to $2.586 per MMBtu (British thermal units in millions).