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Monday, May 27, 2024

Pipelines: Best Performing Segment Of Energy This Past Month — May 27, 2024

Locator: 47965PIPELINES.

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Pipeline stocks have been the best-performing segment of the energy industry in the past month, outperforming oil producers, refiners, and even big players such as Exxon Mobil.

One reason appears to be the rise of artificial intelligence, and the need for natural gas to power the data centers that run AI programs. Pipelines that transmit that gas are in a good position to benefit. Some analysts and investors think it’s a theme that will lift the stocks for longer. 

Shares of leading natural-gas-pipeline company Kinder Morgan are on a 13-day winning streak, their longest on record, and could extend the streak after rising 0.2% in early trading on Tuesday. The stock has risen 9.1% in that time period, and is up 13% this year. Other pipeline operators have seen similar strong performance recently, following first-quarter results. Williams stock is up 7.8% in the past month, while Enbridge shares are up 4.2%, and Oneok stock is up 4.1%. Refiners and oil-producer stocks are down on average over the past month. 

On their latest earnings calls, all those pipeline companies spoke about the rising electricity demand from data centers that process AI applications. Before last month, the term “data center” had seldom been uttered by pipeline executives on earnings calls, according to data company AlphaSense.

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