Crude Oil’s Downturn: AMLP Outperforms Major Energy ETFs

US crude oil prices

On September 1, 2016, active futures contracts for US crude oil (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI) closed at $43.16. That’s a fall of 3.4%—compared to the previous trading session. It’s 15.8% lower than the 2016 high of $51.23 on June 8, 2016.

Crude Oil’s Downturn: AMLP Outperforms Major Energy ETFs

Earlier this week, crude oil fell due to the rise in crude oil inventories and uncertainties about a production freeze deal among major oil producers later this month.

From August 25 to September 1, US crude oil futures contracts for October delivery fell by ~8.8%. Most of the loss could be attributed to renewed supply glut fears.

Natural gas active futures (UNG) fell by ~3.2% during this period due to a higher-than-expected addition to inventories. However, the fall in energy ETFs could be attributed to the fall in oil prices. Later in this series, we’ll analyze the correlations between these ETFs and crude oil and natural gas.

Performance of energy ETFs

Below are the performances of some energy ETFs from August 25 to September 1:

  • Energy Select Sector SPDR ETF (XLE) – fell by ~1.9%
  • Alerian MLP ETF (AMLP) – rose by ~0.2%
  • SPDR S&P Oil & Gas Exploration & Production ETF (XOP) – fell by ~1.4%
  • VanEck Vectors Oil Services ETF (OIH) – fell by ~3.8%

The fall in the above ETFs concurred with the fall of oil prices during this period.

AMLP rose 0.2%. Falling crude oil has less of an impact on midstream companies than other energy sub-industries.

OIH fell the most—the drop in crude oil prices could impact drilling activity. This would have a negative impact on oilfield services companies.

We’ll look at the correlation between energy ETFs and crude oil in Part 4 of this series.

Sentiments related to natural gas (UNG) and crude oil (SCO) (DWTI) also impact other ETFs such as the ProShares Ultra Oil & Gas (DIG), the PowerShares DWA Energy Momentum ETF (PXI), the Vanguard Energy ETF (VDE), the iShares US Energy (IYE), and the Fidelity MSCI Energy ETF (FENY).

In the next part of this series, we’ll compare the price performances of the United States Natural Gas ETF (UNG) and the United States Oil ETF (USO).