3 Midstream Stocks to Monitor in a Volatile Energy Market

Core Viewpoint - The midstream energy sector presents a more stable investment opportunity compared to upstream oil and gas producers, as midstream companies generate fee-based revenues that are less exposed to commodity price volatility [3][4]. Group 1: Oil Price Trends - During the pandemic's initial phase, crude oil prices fell dramatically to a negative $36.98 per barrel on April 20, 2020, due to uncertainties and lack of vaccines [1] - The rollout of vaccines led to a recovery in oil prices, with West Texas Intermediate (WTI) crude reaching $123.64 per barrel by March 8, 2022 [1] - Currently, WTI crude oil is trading at over $70 per barrel, indicating ongoing volatility in commodity prices [2] Group 2: Midstream Companies Overview - Midstream companies like Kinder Morgan, MPLX, and The Williams Companies are highlighted as potential investment opportunities due to their lower exposure to commodity price fluctuations [2][3] - Midstream players benefit from stable fee-based revenues as their transportation and storage assets are contracted for the long term, making their business model relatively low-risk [3] Group 3: Company-Specific Insights - Kinder Morgan (KMI): Operates a vast network of oil and gas pipelines spanning 83,000 miles, primarily earning from take-or-pay contracts, which provide stable revenues. The company is expected to grow due to its resilient business model [5][6] - MPLX: Focuses on midstream energy infrastructure and logistics, generating stable cash flow. The company plans to return capital to unit holders and anticipates earnings and sales growth of 2.4% and 4.5% respectively in 2025 [7] - The Williams Companies (WMB): Engaged in transporting and processing natural gas, the company is well-positioned to meet the increasing demand for clean energy. Its pipeline network covers over 30,000 miles and can supply 30% of the nation's natural gas consumption [8][9]