In this article, we’ll analyze the performance of MLP subgroups in April 2017. Among these subgroups, Liquids Storage MLPs like VTTI Energy Partners (VTTI), Arc Logistics Partners (ARCX), and Blueknight Energy Partners (BKEP) benefited from high crude oil, refined products, and NGL (natural gas liquids) inventory levels. Crude oil (USO) inventories have been close to their all-time highs during the recent months. For more details, read US Crude Oil Inventories Slip from All-Time High.
Gathering and processing MLPs
Gathering and processing MLPs, which were among the best-performing MLPs in the first quarter of 2017, were weak during the recent month. Gathering and processing MLPs include Williams Partners (WPZ), ONEOK Partners (OKS), and MPLX (MPLX). The subgroup on average lost 1.0% in April. This could be attributed to low drilling activity in some regions and uncertainty in crude oil and natural gas prices due to the supply glut.
Liquids transportation MLPs
Liquids transportation MLPs were the third-worst-performing MLP subgroup in April. The decline could be attributed to uncertainty over future production due to the recent volatility in crude oil prices. Lower production directly impacts liquids transportation MLPs’ throughput volumes. Liquids transportation MLPs include Plains All American Pipeline (PAA) and Shell Midstream Partners (SHLX).
Coal-based MLPs like Natural Resource Partners (NRP), CNX Coal Resources (CNXC), SunCoke Energy Partners (SXCP), and Alliance Resource Partners (ARLP) were the second worst performing MLP subgroup in April. The growth in the consumption of natural gas, which has replaced coal as burning fuel for power utilities, could be the main reason for the recent decline in coal MLP stocks.
Upstream MLPs like EV Energy Partners (EVEP) and Legacy Reserves (LGCY) was the worst-performing subgroup in April. This could be attributed to doubts related to survival of the remaining upstream MLPs given the prolonged low price environment.