But there is a bit more to the story than that. If you look at the price changes over the past year, they trended slightly up during the first half of 2014, began to fall in the second half of June after peaking above $107/bbl and continued to decline throughout November. Following OPEC’s Nov. 27 decision not to cut export quotas the decline accelerated. It didn’t slow down until mid-January, when prices broke from the downward trend and flattened out:

So, instead of ending January below $40/bbl, WTI finished the month at $48.24, up over 7% from the previous day’s close. This increase was despite the fact that earlier in the week the Energy Information Administration (EIA) reported that U.S. crude oil stocks rose by almost 9 million barrels over the past week to reach nearly 407 million barrels, the highest level since the government began keeping records in 1982. As I write this, the price has broken back above $50/bbl.

When oil prices are plummeting, traders tend to ignore bullish news, and when they are climbing bearish news is often shrugged off. While oil could resume its decline this month and disprove my prediction by the end of February, the fact that the price of WTI rose despite news that should have sent it lower may indicate that we have reached the bottom.

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

Portfolio Update

Enterprise Rises to Occasion   

During the worst quarter for MLP unit prices in six years, the largest and most conservative midstream partnership of them all performed about as well as might be hoped. On Jan. 29, Enterprise Products Partners (NYSE: EPD) reported a 5% year-over-year increase in its fourth quarter gross margin and a 4% bump in distributable cash flow, good enough for 1.5x coverage on a distribution that increased 5.7% in a year’s time.

Per-unit earnings dropped as the 32% year-over-year drop in the price of natural gas liquids, which are tied to the price of crude, squeezed the variable portion of the partnership’s processing margins.

But new crude and NGL pipelines provided an offsetting lift, as part of the $4.1 billion in new fee-generating assets brought online last year.

“Global energy market is somewhere between turmoil and chaos,” the chief operating officer said on the conference call. “We have no clue how low prices may go or how long they will stay depressed, but then neither does anyone else.”

EPD’s top-notch management team has been through more than one commodity bust over the years, and the game plan remains the same: keep collecting largely fee-based margins backed by multi-year volume commitments, while hunting opportunistically for high-quality assets that might be had from distressed sellers.

For the moment, the main effect of the oil crash on EPD’s plans has been to slow its anticipated investment in new projects from $4 billion to $3.5 billion this year. That’s roughly twice the minimum required to maintain the current distribution growth pace.

But then EPD intends to keep generating one of the biggest coverage cushions in the industry so that it can continue to build out midstream infrastructure in response to a domestic drilling boom management clearly expects to continue over the long haul.

Very few other MLPs can match Enterprise’s financial flexibility, strategic assets and the scale necessary to exploit those advantages. Buy EPD below $42.50.

— Igor Greenwald