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Moving Average Indicates a Bearish Trend for Buckeye Partners

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Jan. 18 2016, Updated 6:02 p.m. ET

Buckeye Partners’ market performance

Buckeye Partners (BPL) is a midstream MLP (or master limited partnership) that mainly provides crude oil and refined products transportation, terminaling, and storage services.

Buckeye Partners has lost 20.9% of its market value during the past year, out of which 15.6% has been lost since the beginning of 2016. The recent decline in BPL’s stock price can be attributed to the huge decline in crude prices since the start of 2016. US WTI (West Texas Intermediate) crude oil breached its 12-year low by trading below $30 per barrel. We’ll look into Buckeye Partners’ commodity exposure later in the series.

BPL’s peers, Sunoco Logistics Partners (SXL), VTTI Energy Partners (VTTI), and NuStar Energy (NS) have lost 51.3%, 20.1%, and 45.1%, respectively, during the past year. At the same time, the Alerian MLP ETF (AMLP), which comprises 22 midstream energy MLPs, has come down by 41.4%.

This indicates a general weakness in the midstream sector. However, Buckeye Partners has outperformed most of its peers and the broader midstream MLP sector during the past year.

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Moving averages indicate a bearish trend in BPL

Buckeye Partners is currently trading below its 50-day and 200-day moving averages by 13.6% and 26.9%, respectively. This indicates a bearish trend in BPL’s stock.

BPL tried to cross the 50-day moving average during the start of 2016, but it failed following the recent decline in crude oil prices.

Buckeye Partners’ recent earnings

Buckeye Partners reported distributable cash flow of $135.6 million for 3Q15 compared to $140.5 million during 3Q14, a year-over-year decline of 3.5%. Plus, BPL’s 3Q15 distributable cash flow fell compared to the prior quarter. The quarterly decrease in BPL’s distributable cash flows led to a decline in its coverage ratio. BPL’s 3Q15 coverage stood at 0.89x versus 0.97x in 2Q15.

Later in this series, we’ll analyze BPL’s operating performance, leverage position, and cash flow measures. Following an analysis of BPL’s financial statements, we’ll look into BPL’s valuations, its commodity price exposure, and analyst projections.

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