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Buckeye Partners Is Underperforming AMLP: Can It Bounce Back?

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Midstream energy sector

Midstream energy companies have been outperforming the broader energy sector in recent trading sessions. The Alerian MLP ETF (AMLP) has gained 4.5% in the past month. At the same time, the Energy Select Sector SPDRÂ ETF (XLE) has fallen 0.4%. The Alerian MLP ETF is a few percentage points away from entering the positive territory for 2018.

There’s generally positive sentiment in the midstream energy sector due to strong US drilling activity and strong crude oil prices. US crude oil prices have cooled off from their highs last month. However, crude oil is still trading significantly above the levels during the same period last year. Read Can US Crude Oil’s Recovery Be Sustained? to learn more.

Buckeye Partners (BPL), an AMLP constituent, has continued to disappoint the markets. Buckeye Partners had a decent start to this month. However, the strength didn’t continue due to its recent rating downgrades and target price cuts. Overall, Buckeye Partners has lost 6.2% in the past month.

Buckeye Partners’ YTD performance

Buckeye Partners has lost 26.5% since the beginning of 2018. NuStar Energy (NS), Shell Midstream Partners (SHLX), and Magellan Midstream Partners (MMP) have lost 20.1%, 22.7%, and 1.3% YTD (year-to-date). The Alerian MLP ETF has lost 2.6%. Buckeye Partners’ underperformance compared to AMLP could be attributed to the partnership’s weak earnings growth, relatively higher commodity price exposure, and low distribution coverage.

Series overview

In this series, we’ll discuss whether Buckeye Partners can bounce back from here. We’ll discuss Buckeye Partners’ technical indicators and price forecast. We’ll look at the partnership’s distribution yield, institutional activity, and analysts’ recommendations.

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