• Energy investors experienced volatility during the first half of 2017 as persistent oversupply concerns and doubts about the efficacy of OPEC’s output cut dragged on oil prices. Prices on West Texas Intermediate crude oil fell more than 14% in the first half of 2017.1
  • On a relative basis, master limited partnership (MLP) and energy credit indexes fared better than oil itself but, as the chart highlights, still finished the first half of the year either in negative or mildly positive territory.2
  • In July, however, the makings of a more constructive picture have emerged for both oil prices and energy investors. Stockpiles of crude oil globally have drawn down significantly in recent months – in the U.S., stockpiles this week fell below last year’s levels.4 Additionally, crude oil production in the U.S. fell in the second half of July, perhaps a result of lower commodity prices.3
  • Within this environment, major energy investments saw the beginnings of a turnaround, with month-to-date returns on major MLP, high yield bond and senior secured loan energy indexes exceeding those of the prior six months.2

1 Federal Reserve Bank of St. Louis, http://bit.ly/292Tgue.
2 Alerian MLP Index; Bank of America Merrill Lynch High Yield Energy Index; Credit Suisse Leveraged Loan Index (energy).
3 Bloomberg, based on U.S. Department of Energy data.
4 U.S. Energy Information Administration, http://bit.ly/2ueQorn.

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