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Matthias Knab, Opalesque: PIMCO writes on Harvest Exchange:
We largely attribute the recent pullback in master limited partnerships (MLPs) to technical factors rather than any meaningful deterioration in underlying fundamentals. Combining attractive pricing with strong distribution yields, we believe this is an excellent time for investors to consider a capital allocation to MLPs.
Ever since OPEC's announcement of oil production quotas in late 2016, core OPEC countries have, to the surprise of many, largely complied with the agreement. However, higher-than-expected output from Libya, Nigeria and especially U.S. shale oil has caused oil prices to decline by more than 20% from their recent highs in early 2017.
Alongside weakness in oil, we are seeing indiscriminate selling in energy-related sectors, including MLPs. (Master limited partnerships are U.S.-based publicly traded partnerships, listed and traded on a public exchange. They are most common in the energy industry, providing and managing resources such as oil and gas pipelines.) The recent selling pressure, especially from retail investors, is similar in magnitude to what we witnessed in the second half of 2015: This June marks the first month of negative retail flows since January 2016, even though initial conditions today are much better. Crude oil inventory balances are actua...................... To view our full article Click here
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