Three Pipeline Stocks to Watch Amid Favorable Oil Pricing and Rising Clean Energy Demand

Oil pipeline stocks are expected to perform well due to favorable crude pricing, stable demand for transportation and storage, and rising clean energy demand from data centers. Companies like Enbridge Inc., Kinder Morgan, Inc., and The Williams Companies Inc. are benefiting from long-term contracts and diversified renewable energy portfolios. The industry's outlook is bright, with a Zacks Industry Rank of #76.

Oil pipeline stocks are poised for strong performance in the coming quarters, driven by several favorable factors. The crude pricing environment is expected to remain favorable, which is likely to lead to stable transportation and storage demand. Additionally, the rising demand for clean energy from data centers is brightening the prospects for natural gas transportation companies. This positive outlook is reflected in the Zacks Oil and Gas - Production and Pipelines industry, which currently carries a Zacks Industry Rank of #76, indicating solid near-term prospects.

Key players in this industry, such as Enbridge Inc. (ENB), Kinder Morgan, Inc. (KMI), and The Williams Companies Inc. (WMB), are benefiting from stable fee-based revenues due to long-term contracts. These companies are also investing in renewable energy projects, diversifying their portfolios and generating additional cash flows. The U.S. Energy Information Administration (EIA) forecasts that the spot average price of West Texas Intermediate (WTI) crude will remain favorable for exploration and production activities in 2025 [1].

The midstream assets of these companies are booked by shippers for the long term, generating highly predictable cash flows. This business model is not highly vulnerable to volatility in oil and natural gas prices. Furthermore, the increasing demand for natural gas from data centers is positioning these companies to capitalize on this growing market. Kinder Morgan, for instance, transports nearly 40% of the natural gas supplied to LNG export facilities in the United States [1].

Investors should also note that the Zacks Oil and Gas - Production and Pipelines industry has outperformed the S&P 500 and the broader Zacks Oil - Energy sector over the past year. The industry has jumped 24.1% compared to the 21.4% rise of the S&P 500 and 9% growth of the broader sector. Based on the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) ratio, the industry is currently trading at 13.86X, lower than the S&P 500’s 17.95X but above the sector’s trailing 12-month EV/EBITDA of 5.05X [1].

Kinder Morgan, with a Zacks Rank #3 (Hold), has seen significant institutional investment. In the first quarter, 59 North Capital Management LP acquired 6,857,982 shares of Kinder Morgan, valued at approximately $195.7 million, making it the firm's sixth-largest position [2]. Several hedge funds, including Sierra Ocean LLC and JNBA Financial Advisors, have also increased their holdings in Kinder Morgan during the first quarter [2].

In summary, the favorable crude pricing environment, stable demand for transportation and storage, and rising clean energy demand from data centers are driving the positive outlook for oil pipeline stocks. Companies like Enbridge Inc., Kinder Morgan, Inc., and The Williams Companies Inc. are well-positioned to capitalize on these trends, making them attractive investment options for investors seeking stable cash flow and growth opportunities.

References:
[1] https://www.nasdaq.com/articles/3-oil-pipeline-stocks-strong-potential-thriving-industry
[2] https://www.marketbeat.com/instant-alerts/filing-6857982-shares-in-kinder-morgan-inc-kmi-purchased-by-59-north-capital-management-lp-2025-09-02/