Preferreds mixed on oil oversupply; China data provides small boost; banks trade actively

By Christine Van Dusen

Atlanta, Jan. 19 – Some preferred stocks improved slightly on Tuesday morning on better-than-expected economic data from China, but others remained under pressure from lower oil prices.

A new report from the International Energy Agency showed that oil supply is outpacing demand, which could put an “enormous strain on the ability of the oil system to absorb it efficiently.”

Unless something changes, the report said, “the oil market could drown in oversupply.”

On Tuesday, West Texas Intermediate oil prices dropped and Brent prices rebounded somewhat.

In response, commodity-related preferreds were mixed. Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) opened Tuesday at $4.43, down 7 cents.

But Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) opened stronger at $3.36, up 58 cents, then closed at $3.10. And Legacy Reserves LP’s series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) moved up 25 cents to open at $2.51. The shares closed Tuesday at $2.30.

Market-watchers were also keeping an eye on banks, many of which recently released earnings that beat expectations.

Wells Fargo & Co.’s 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) opened on Tuesday down 6 cents at $25.74 before closing at $25.78. Its 5.2% class A series N noncumulative preferreds (NYSE: WFCPN) lost 23 cents, opening at $25.12. The stock closed at $25.10.

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