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Does ETE’s Recent Correction Suggest a New Downtrend?

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Energy Transfer Equity’s recent performance

Energy Transfer Equity (ETE), the MLP GP of Energy Transfer Partners (ETP), is off from its May highs. ETE saw a strong rally at the start of the month supported by strong recovery in the midstream energy sector due to the rise in crude oil prices. 

Overall, ETE has risen 5.7% since the start of the month, while the Alerian MLP ETF (AMLP) is trading in the red for the month.

ETE fell 2.3% on May 24 and opened lower on May 25. The recent weakness in ETE can be attributed to the correction in crude oil prices, the rise in US Treasury yields, and fresh troubles related to the Mariner East project. According to industry sources, a Public Utility Commission judge has again stopped operations on the Mariner East 1 pipeline and construction of the Mariner East 2 pipeline.

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Energy Transfer Equity’s YTD performance

ETE is outperforming the Alerian MLP ETF and underperforming the energy sector YTD (year-to-date). ETE has fallen 2.8% YTD, while AMLP has fallen 7.1% YTD. The Energy Select Sector SPDR ETF (XLE) has risen 2.4%. ETE’s peer Williams Companies (ETE) has fallen 12.2% YTD, while Plains GP Holdings (PAGP) has risen 6.7%.

Series overview

In this series, we’ll try to find out whether ETE could slide further from here. We’ll look into GP’s technical indicators and price forecast. Following this, we’ll look into ETE’s valuation and analyst recommendations.

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