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Energy Transfer Equity Is Underperforming AMLP in 2018

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Nov. 20 2020, Updated 3:41 p.m. ET

Energy Transfer Equity’s recent performance

Energy Transfer Equity (ETE) has gained 3.3% since the beginning of 2018. At the same time, the Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, has risen 7.8%. The strong gains in the midstream energy sector are mainly due to strong crude oil prices, a strong increase in drilling activity, and a strong rise in natural gas demand.

US crude oil has risen 5.6% since the beginning of the year. Currently, it’s trading close to its three-year high. Read Key Bearish Factors for Crude Oil Prices in 2018? for a recent update on crude oil prices.

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Energy Transfer Equity’s underperformance compared to AMLP could be attributed to the general partner’s low correlation with natural gas prices and natural gas demand. It could be attributed to Energy Transfer Partners’ (ETP) lower exposure to the demand-pull natural gas business compared to some of its peers.

Historical performance

Despite the recent gains, Energy Transfer Equity has lost 5.3% in the past year. Its peers, NuStar GP Holdings (NSH) and Plains GP Holdings (PAGP) have lost 44.2% and 28.5%, respectively. Energy Transfer Equity’s C corporation peer, Williams Companies (WMB) has gained 15.0% in the past year. Read ETE, PAGP, WGP, WMB: Which Could Outperform Peers in 2018? for a comparative analysis of four general partners, including Energy Transfer Equity.

Series overview

In this series, we’ll discuss whether Energy Transfer Equity could gain upward momentum after the recent gains. We’ll discuss the partnership’s price forecast and technical indicators. We’ll also discuss its valuation and analysts’ recommendations.

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