AMZ rose 1.9% last week
MLPs had a weak start to last week amid weakness in crude oil and the Trump administration’s rejection of a demand from Plains All American Pipeline (PAA) that pipeline companies be exempted from the 25% tariff on steel imports.
The weak start to the week was followed by a massive rally on July 19 after the FERC (Federal Energy Regulatory Commission) announced the finalization of a policy rule related to the treatment of income tax for interstate natural gas pipeline operators. The final rules provide some relaxation to these MLPs. We’ll look more into this in a later article.
The Alerian MLP Index (^AMZ), which includes 44 energy MLPs, rose 1.9% last week to end up at 270.9. Of the total 94 MLPs, 60 ended in the green, four remained unchanged, and the remaining 30 ended in the red. Among the top MLPs, Williams Partners (WPZ), Energy Transfer Partners (ETP), MPLX LP (MPLX), and Enterprise Products Partners (EPD) rose 5.5%, 4.2%, 2.0%, and 1.1%, respectively. The Alerian MLP ETF (AMLP), which is made up of 25 energy MLPs, rose 1.5%.
What could happen this week?
The FERC news and gains in crude oil prices could continue to drive positive momentum in MLPs this week. US crude oil has recovered ~4% from its month’s low. For recent updates and an outlook on crude oil prices, read Could There Be Dark Clouds Ahead for Oil?
On the other hand, a fall in US drilling activity and general weakness in US markets amid escalated trade war tensions could weigh on MLPs’ performances this week. According to Baker Hughes, a GE company, the total US rig count fell by eight last week compared to the previous week.
In the next article, we’ll look into the WTI Cushing–WTI Midland spread and its effects on MLPs.