Master Limited Partnership exchange traded funds rebounded Tuesday after a two-day plunge on a broad sell-off in energy-related assets in response to the Organization of Petroleum Exporting Countries’ decision to keep supply flowing.
The JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ) rose 3.0% and the Alerian MLP ETF (NYSEArca: AMLP) gained 2.0% Tuesday. Year-to-date, AMJ is up 4.0% while AMLP gained 5.1%. Both investments products track the Alerian MLP Index.
Merrill Lynch’s commodity analysts argue that large MLPs will remain insulated from low oil prices as long as crude oil does not remain below $70 per barrel, reports Chris Lange for 24/7 Wall Street. The analysts project West Texas Intermediate crude oil could average $84 per barrel in 2015.
WTI crude oil futures are currently hovering around $67.4 per barrel.
The Merrill Lynch analysts believe that companies like Kinder Morgan (NYSE: KMI), Enterprise Products Partners (NYSE: EPD), Magellan Midstream (NYSE: MMP), Buckeye Partners (NYSE: PBL) and Plains All American (NYSE: PAA) could be partially insulated if oil prices remain low.
AMJ includes a significant tilt toward EPD 15.5%, along with Kinder Morgan Energy Partners L.P. (NYSE: KMP) 9.6%, PAA 6.7% and MMP 4.4%. Additionally, AMLP holds EPD 10.5%, PAA 7.6%, MMP 7.4% and BPL 6.0%.
Kinder Morgan Inc. completed its acquisitions of Kinder Morgan Management LLC (NYSE: KMR), Kinder Morgan Energy Partners L.P. and El Paso Pipeline Partners L.P. (NYSE: EPB) at the end of last month. [Changes Afoot for MLP ETFs as Kinder Morgan Deal Nears Closure]