VettaFi Head of Energy Research Stacey Morris speaks to Thomas Warner from Proactive about the latest developments in the midstream sector of the energy industry.
Morris explains that despite softening oil prices softening since late September, the midstream sector has been "doing what it should" and providing a robust defence for investors. She says that the index underlying the Alerian Midstream Energy Dividend UCITS ETF (LSE:MMLP) rose 7% in November despite a 6% fall in WTI prices over the same period.
"What we like about the midstream space is that these companies can generate free cash flow whether oil is at $60, $80 or $100/bl. That's allowing to really execute on paying dividends and buying back their equity."
When pressed on what's next for oil prices, Morris describes the outlook as "murky" and highlights what she considers a lack of upside drivers heading into 2023 and increasing supply from outside the OPEC+ group.