Consequently, the Alerian MLP Index has replaced EPB and KMP with Martin Midstream Partners (NasdaqGS: MMLP) and Valero Energy Partners (NYSE: VLP). However, it appears that AMJ has yet to replace its Kinder Morgan exposure.
Unlike other energy sector stocks, MLPs primarily deal with the distribution and storage of energy products, so their business model is less reliant on the commodities market since MLPs profit off the quantity of oil and natural gas they are able to move around. In the U.S., we are experiencing an oil boom from new drilling techniques implemented in shale oil beds and shale oil drillers have stated that they are increasing production. [Oil ETFs: Shale Producers Continue Boosting Output]
Looking ahead, Merrill Lynch warns that supply chain disruptions are a key factor to potential growth concerns. Specifically, MLPs could lose key customers due to lower domestic crude oil supply, experience a sustained period of low natural gas prices and be hindered by hurricanes, which would all negatively affect volumes following through MLP pipelines.
JPMorgan Alerian MLP Index ETN
For more information on master limited partnerships, visit our MLPs category.