MLPs Had a Massive Start to 2018

AMZ rose 5% last week

MLPs had a massive start to 2018. The Alerian MLP Index (or AMZ), which includes 50 energy MLPs, rose 5% last week, which ended January 5, 2018, to end at 287.4.

Of the 92 MLPs, 82 ended in the green, and the remaining ten ended in the red. Among the top MLPs, Plains All American Pipeline (PAA), Williams Partners (WPZ), Enterprise Products Partners (EPD), and Energy Transfer Partners (ETP) rose 8%, 6.6%, 4.6%, and 4.6%, respectively. We’ll look at the performance drivers for the top MLP losers and gainers in this series.

MLPs Had a Massive Start to 2018

The Alerian MLP ETF (AMLP) ended the week 4.7% higher. It outperformed both the SPDR S&P 500 ETF (SPY) (SPX-INDEX) and the Energy Select Sector SPDR ETF (XLE). SPY and XLE rose 2.2% and 3.8%, respectively.

The rise of MLPs last week could be mainly attributed to strong crude oil prices, US tax reforms, and a strong recovery in US drilling activity, which indirectly drives the throughput volumes of MLPs. US crude oil reached a three-year high last week. Overall, crude oil ended the week 1.7% higher at $61.40 per barrel. For a recent update on crude oil prices, read Has Your Energy Portfolio Deviated from Oil’s 3-Year High?

Fund flows

The Alerian MLP ETF saw a net outflow of funds last week. That could be attributed to some profit bookings in MLPs last week. ALMP saw a $22.7 million net outflow of funds. The JPMorgan Alerian MLP ETN (AMJ) saw a net inflow of $1.1 million.

In the next part of this series, we’ll look at last week’s top MLP gainers.