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What Drove Cheniere Energy’s Market Performance in 3Q17?

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Aug. 18 2020, Updated 5:31 a.m. ET

Cheniere Energy’s market performance

Cheniere Energy (LNG) had a strong start to October. However, the initial gains were offset by the recent declines. Cheniere Energy has lost 6.2% from the three-month high of $47.9 on October 17. Overall, it has lost 8.8% since the beginning of the third quarter through October 25. Cheniere Energy saw its YTD (year-to-date) low of $40.8 during the quarter. However, it has recovered significantly.

Cheniere Energy’s subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners LP Holdings (CQH), have lost 14.6% and 8.0%, respectively, since the beginning of the third quarter. At the same time, the Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, has lost 12.5%. Cheniere Energy and its subsidiaries’ weak performance during the third quarter could mainly be attributed to the rise in geopolitical tensions in the Korean Peninsula, volatility in LNG prices, and the general negative sentiment in the midstream energy sector.

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Cheniere Energy’s YTD performance

The recent weakness has significantly eroded Cheniere Energy’s YTD gains. It has risen 7.2% YTD as of October 25, 2017. At the same time, Cheniere Energy Partners has lost 4.5%, while Cheniere Energy Partners Holdings has risen 10.8%. Despite the recent weakness, Cheniere Energy is outperforming AMLP and the energy sector in 2017. However, it’s underperforming the broader US markets. The Alerain MLP ETF and the Energy Select Sector SPDR ETF (XLE) have lost 16.9% and 10.5%, respectively, in 2017. The SPDR S&P 500 ETF (SPY) (SPX-INDEX) has risen 14.8%.

Cheniere Energy’s price forecast

Cheniere Energy’s 30-day implied volatility was 25.9% as of October 25, 2017, which is higher than the 15-day average of 25.5%. Based on its current implied volatility, Cheniere Energy might trade in the range of $43.4–$46.6 in the next seven days. Cheniere Energy is expected to trade within this range with a 68% probability. It assumes a normal distribution of prices.

In the next part, we’ll analyze Cheniere Energy’s technical indicators.

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