Week Thoughts: Midstream Beats Energy, Lags Market
Canada wins, data center talk has less juice this week.
Midstream held up reasonably well despite weakness in oil prices and energy stocks, but U.S. midstream corporations underperformed Canada and MLPs. Strong natural gas prices and lower interest rates were modest tailwinds, but oil, negative sentiment were too much to overcome, even with solid 1Q results so far, as detailed below.
Geopolitical risk premium in the global oil market faded this week, and less robust jobs report doesn’t help the demand side of the oil equation. Natural gas prices popped this week, even with headlines of Eagle Pass LNG delay. Notwithstanding the ups and downs of commodity prices, earnings so far have been reassuring, especially among the natural gas focused names that are not seeing much financial impact from low natural gas prices.