• 3 minutes Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 5 minutes Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 9 minutes This Battery Uses Up CO2 to Create Energy
  • 12 minutes Shale Oil Fiasco
  • 1 hour Historian Slams Greta. I Don't See Her in Beijing or Delhi.
  • 21 hours Indonesia Stands Up to China. Will Japan Help?
  • 6 hours We're freezing! Isn't it great? The carbon tax must be working!
  • 11 hours US (provocations and tech containment) and Chinese ( restraint and long game) strategies in hegemony conflict
  • 2 hours Beijing Must Face Reality That Taiwan is Independent
  • 22 hours Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value
  • 1 day Environmentalists demand oil and gas companies *IN THE USA AND CANADA* reduce emissions to address climate change
  • 13 hours Might be Time for NG Producers to Find New Career
  • 9 hours Trump has changed into a World Leader
  • 2 days Anti-Macron Protesters Cut Power Lines, Oil Refineries Already Joined Transport Workers as France Anti-Macron Strikes Hit France Hard
  • 2 days Phase One trade deal, for China it is all about technology war
  • 2 days Angela Merkel take notice. Russia cut off Belarus oil supply because they would not do as Russia demanded

3 Reasons Buying To Buy Untrendy MLPs

Fracking

Master Limited Partnerships (MLPs) are about as fashionable as hot pants. Like the skimpy shorts of the seventies they retained a hard core of fans and have even seen various moments when it looked like they were coming back, but mainstream opinion has remained negative. Now, however, there are three factors that suggest that at the very least the worst could be over, and which may actually result in MLPs seeing a resurgence in popularity.

The argument against MLPs is obvious and well known. The big drop in oil a few years ago and subsequent cost-cutting by energy companies is still hurting. Pipelines are made from steel, a product that looks set for price hikes as the Trump trade wars begin. The rising rate environment, long-signaled and now being enacted by the Fed, makes the yield that is the basis of MLP’s appeal for investors less attractive. And, last but by no means least, a recent rule change by the Federal Energy Regulatory Commission (FERC) sparked another sharp selloff as it was seen as potentially having a negative impact on pricing and/or margins for the pass through partnerships.

That is a depressing list, so it is little wonder that the performance of MLPs has been dismal. In February of last year, the Alerian MLP ETF (AMLP) was at its two-year high. Since then, while the S&P 500 has gained around fifteen percent, AMLP has lost over thirty. The chart isn’t pretty…

(Click to enlarge)

Regular readers will know…




Oilprice - The No. 1 Source for Oil & Energy News