MLPs earn money by transporting energy or storing the products. Since revenue is based on volume, MLPs may be less sensitive to crude prices. However, with crude oil prices near seven-year lows, investors are growing concerned about the energy industry’s ability to keep pumping oil.
For instance, the energy sectors cuts to distributions has caused industry bellwether Kinder Morgan (NYSE: KMI) to cut dividends by 75% on Tuesday, the Wall Street Journal reported.
Nevertheless, some are calling a bottom in the energy market. For instance, AlphaShark Trading founder Andrew Keene pointed to a triple bottom in the S&P 500 Energy Sector, a potentially bullish indicator, reports Amanda Diaz for CNBC. The sector hit a bottom in August and bounced, then in October and bounced, and we could be seeing another rebound in the making. A triple bottom chart pattern is often viewed as a reversal of a long-term downtrend.
JPMorgan Alerian MLP Index ETN
For more information on master limited partnerships, visit our MLPs category.
Max Chen contributed to this article.