Why BreitBurn Energy Partners L.P. Plummeted 12.2% Today

By Markets Fool.com

What: Units of BreitBurn Energy Partners L.P. sold off more than 12% today.

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BBEP Price Chart

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Today's drubbing was caused by another big drop in oil prices, which were off by 4.2% of the day. More bearish sentiment from analysts, who continue to cut price forecasts, caused another downdraft in oil prices today.

So What: Today's sell-off in BreitBurn Energy Partners is just more panic selling as crude oil prices have yet to find a bottom. Investors worry not only that oil prices could go lower, but also that low oil prices are here to stay. While BreitBurn Energy Partners is fairly well insulated against the short-term drop in oil prices thanks to its hedging program, its cash flow will take a hit if oil prices stay low for more than a year.

Now What: There's really not much investors can do in times like these. When the market panics, stocks relating to that panic are sold off. Companies with higher debt levels and weaker distribution coverage ratios, which is the case with BreitBurn Energy Partners, tend to be even more volatile during these times as investors fear the worst-case scenario. However, once fears abate we'll probably see BreitBurn Energy's unit price recover, but there's no telling right now when the oil market will calm down.

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The article Why BreitBurn Energy Partners L.P. Plummeted 12.2% Today originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends BreitBurn Energy Partners. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.