Stock price performance
So far, midstream companies Targa Resources (TRGP) and ONEOK (OKE) have outperformed the broader energy sector in 2018. ONEOK has risen ~24%, while Targa Resources has risen ~13% YTD (year-to-date). In comparison, the Energy Select Sector SPDR ETF (XLE) has risen ~4% YTD. The Alerian MLP ETF (AMLP) has been relatively flat during the same period.
Kinder Morgan (KMI) has fallen ~5% YTD. The above graph compares ONEOK, Targa Resources, and Kinder Morgan’s price performance in 2018. Crude oil prices have risen ~14% in 2018.
Targa Resources stock is trading well above its 50-day and 200-day moving averages. The company’s 50-day moving average crossed above its 200-day level—a bullish indicator—in January.
ONEOK stock fell below its 50-day moving average on August 1. ONEOK’s 50-day average might act as a resistance for the stock in the near term.
Strong NGL prices
One of the factors driving Targa Resources and ONEOK stocks is strength in NGL (natural gas liquids) prices. Targa Resources primarily gathers, processes, and sells natural gas and NGLs. The company is also involved in the gathering, storing, and selling of crude oil and refined products. ONEOK mainly gathers, processes, stores, and transports natural gas and NGLs.
So, the two companies’ operations are mainly focused on natural gas and NGLs. Next, we’ll see how the recent strength in NGL prices impacts ONEOK and Targa Resources’ performance.