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Sunoco Logistics Partners’s Strong Start to 2017: What’s Next?

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Sunoco Logistics’s YTD returns

Sunoco Logistics Partners (SXL) had a decent start to 2017. SXL’s primary business activities include crude oil, NGLs (natural gas liquids), and refined products transportation, terminaling, and marketing. It has gained 6.1% since the beginning of 2017.

Among SXL’s peers, Buckeye Partners (BPL) and NuStar Energy (NS) have gained 3.9% and 5.9%, respectively, in 2017. Year-to-date, Plains All American Pipeline (PAA) has fallen 3.0%. However, SXL and most of its peers are still trading below the levels before the rout in energy prices. We’ll explore this in more detail in the next article.

The Alerian MLP ETF (AMLP), which comprises 26 energy MLPs,[1. master limited partnerships] has gained 1.8% in 2017. SXL outperformed AMLP by 4.3%.

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Sunoco Logistics Partners’s stock performance drivers

Sunoco Logistics Partners’s (SXL) outperformance relative to AMLP can be attributed to the strong recovery in drilling activity in the Permian and Northeast regions, where SXL has an active presence. Its recovery also benefited from the removal of the blockade for two major pipeline projects—the Dakota Access Pipeline (or DAPL) and Mariner East 2.

Energy Transfer Partners (ETP) has resumed construction of the Dakota Access Pipeline project after receiving the necessary easements from the U.S. Army Corps of Engineers. It expects to bring the pipeline online by the end of 2Q17.

ETP and SXL together own 37.5% of the DAPL project. The partnership recently completed the pending 37.5% stake sale in the Bakken Pipeline project to MarEn Bakken Company after receiving the easement. MarEn Bakken is a JV formed by Enbridge Energy Partners (EEP) and MPLX LP (MPLX).

Series overview

In this series, we’ll discover whether Sunoco Logistics Partners (SXL) can gain upward momentum from here. We’ll look into SXL’s price outlook using technical indicators such as moving averages and the relative strength index. We’ll also look into SXL’s valuations, key performance indicators, and analysts’ projections.

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