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MLPs Approach Their 52-Week Lows amid Crude Oil Price Weakness

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Year-to-date lows

Master limited partnerships have seen a series of major sell-offs in the past few weeks due to significant weakness in crude oil prices. The Alerian MLP ETF (AMLP), which comprises 25 energy MLPs, has fallen 7.5% since the beginning of June 2017. 

During the same timeframe, crude oil has fallen 10.0% while the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has lost 7.7%. About 65 of the 102 MLPs selected for analysis reached new year-to-date (or YTD) lows during the recent crash.

Most midstream MLPs are indirectly exposed to crude oil through production and drilling activity. Their sell-off activity could be attributed to investors’ fears over the fall in crude oil production if prices fall below a certain level.

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Crude oil prices slid

Several MLPs with relatively higher direct commodity price exposure were most affected by the decline in crude oil prices. The chart above shows the MLPs that are trading close to their 52-week lows, comprising mostly MLPs involved in crude oil transportation. These prices were collected on June 20, 2017, and are not adjusted for distributions or splits.

NuStar Energy (NS), Plains All American Pipeline (PAA), NGL Energy Partners (NGL), Enbridge Energy Partners (EEP), and Genesis Energy (GEL) are among the MLPs that have relatively high crude oil exposure through their crude acquisition and marketing businesses.

Energy Transfer Partners (ETP), EnLink Midstream Partners (ENLK), and DCP Midstream Partners (DCP) have exposure to crude oil through their natural gas midstream businesses. ETP also has exposure through its crude oil acquisition and marketing business.

Buckeye Partners (BPL), EQM Midstream Partners (EQM), Hi-Crush Partners (HCLP), Spectra Energy Partners (SEP), and Teekay Offshore Partners (TOO) are among the other MLPs that are trading close to their 52-week lows.

Series overview

In this series, we’ll look at the reasons behind the weak performance for each of these MLPs and as well as their commodity price exposures. We’ll also examine their recent analyst recommendations.

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