Alerian MLP ETF
The Alerian MLP ETF (AMLP), which comprises 23 midstream energy MLPs, fell 2.4% on October 22, 2015. In fact, the entire midstream sector was down yesterday, as midstream energy giant Kinder Morgan (KMI) lowered its distribution growth guidance to 6%–10% for 2016 in its 3Q15 earnings release on October 21.
Investors seem to be worried about the growth prospects of the remaining midstream companies, which are typically structured as MLPs. We’ll cover an in-depth analysis of Kinder Morgan’s 3Q15 earnings in a separate series. Keep an eye on our Master Limited Partnerships page.
The Alerian MLP ETF underperformed the SPDR S&P 500 ETF (SPY) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) by 4.11 percentage points and 2.99 percentage points in yesterday’s trade, respectively. SPY, which tracks the broader S&P 500 index, rose 1.7%. AMLP has returned -24.1% year-to-date, while SPY is down 0.14% over this timeframe.
United States Oil ETF
The United States Oil ETF (USO) rose 0.55% yesterday. The ETF tracks daily movement in WTI (West Texas Intermediate) light crude oil. In yesterday’s trade, WTI futures settled 18 cents higher, at $45.38 a barrel. For context, the upstream energy company heavy SPDR S&P Oil & Gas Exploration & Production ETF (XOP) gained 0.57%.
Most upstream MLPs, which have already lost significant market value since the rout in energy prices, ended in the red yesterday despite a slight rise in crude oil prices. Top upstream MLP losers include Memorial Production Partners (MEMP), Vanguard Natural Resources (VNR), Linn Energy (LINE), and EV Energy Partners (EVEP). These MLPs lost 2.8%, 1.9%, 1.5%, and 1.2%, respectively.
For an in-depth analysis of the recent operating and market performances 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 ETF (UNG), which tracks daily movements in natural gas futures, fell 0.82%.