Morning Commentary: Preferred market flat as oil prices heavy; oil and gas issues ‘getting hit’

By Stephanie N. Rotondo

Phoenix, Jan. 12 – The preferred stock market was initially up as the first trading day of the week began but by mid-morning had dwindled down to about flat with Friday’s market.

The moves in the preferred space came as oil prices were taking sizable hits once again. Both West Texas Intermediate and Brent crude had lost over 4% early in the session, trading with $46 and $47 handles, respectively.

“Oil keeps selling off, a couple bucks every day,” a trader said. “Anything tied to oil is getting hit.”

Among MLPs, Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) were off 47 cents, or 2.27%, at $20.23 at mid-morning. Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were down 57 cents, or 2.82%, at $19.65.

Meanwhile, Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) had fallen 68 cents, or 7.49%, by mid-morning, trading at $8.40.

A trader remarked that overall liquidity in the market was improving as investors try to figure out “where oil is going to settle at, how it will effect inflation and what the Fed is going to do.”

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