Standing on the threshold of 2016, oil investors can only wish for a recovery from the slipping prices that crushed the space throughout the year. Those who track the equity market on a daily basis saw how crude prices hurt the broader market almost every day of 2015.

Major energy firms with significantly lower year-over-year operating income are now saddling a huge debt load. Weak operations followed by poor financials eventually compelled the players to reduce headcount, making 2015 a year of agony for everyone related to the space.

What’s even worse is that oil prices are projected to remain low in the near term. In such a backdrop, adding an energy company to one’s portfolio obviously seems foolish. However, we have indentified energy players that impressed even amid low commodity prices.

Oil in 2015

Let’s first take a look at the reasons for such a drastic fall in oil prices. Since mid-2014, the commodity’s price has been plunging primarily due to excess supply of crude in the global market.

Here’s a quick recap of the history of crude oversupply. During 1990 and early 2000, the U.S. was more dependent on crude import as domestic demand was far above its conventional oil supply. But with the invention of new techniques like hydraulic fracturing and horizontal drilling, U.S. shale producers ramped up oil production relentlessly. Eventually, owing to the huge scale of crude output, the U.S. started relying less on oil import.

The shale boom turned the U.S. into an oil-surplus economy from a crude-deficit region. Along with the U.S., the Organization of the Petroleum Exporting Countries (OPEC) – the international cartel of oil producers – also pumped up more crude. All these events led to a global oversupply of the commodity and pushed oil to its multi-year lows.

Now the question that arises is what stopped the big oil producers from reducing output in 2015, when the measure could have taken crude back to its glorious days as were seen in the first half of 2014.

Looking back, a war for market share has been raging among big oil producers like OPEC, the U.S. and Russia. Each of these markets has been pumping hard and competing for market share, completely ignoring the downtrend in oil price.

On top of that, at the recent meeting in Vienna, OPEC decided not to cut oil production. Instead, the cartel raised its production ceiling. Saudi Arabia-led OPEC explained that if it is the only block to curb output when other players continue to produce at their own lofty levels, it will end up losing market share. 

This early-December decision dealt a huge blow to the energy market and dragged West Texas Intermediate (WTI) crude price further to below the $40-per-barrel mark. Even yesterday, oil closed at $36.81 per barrel.

Who Survived the Oil Rout?

It is now clear that plentiful supply of the commodity dragged the energy prices down. Most importantly, many analysts foresee oversupply in the near term, too. But this pricing weakness came as a boon for energy players involved in downstream activities – especially the refiners.

Refiners buy raw crude and process the commodity to form refined products like gasoline. Since refiners were able to buy the commodity at much lower prices, their operating cost saw a dramatic decline. On top of that, the supply glut called for increased storage and transportation services.

Overall, the midstream firms, in particular the refiners, have enjoyed the bearish crude trend for a length of time. Below is the WTI crude price chart for 2015:

Data Source- Energy Information Administration (EIA)

Top 3 Performers

Among the midstream players that made most of the oversupply situation, we present three top energy stocks that generated solid YTD returns. Moreover, these stocks are backed by a favorable Zacks Rank, which makes worth a look.

Alon USA Partners LP (ALDW - Snapshot Report)

Dallas-based Alon USA Partners primarily engages in the refining and marketing of petroleum products in the U.S market. The partnership is the operator of Big Spring, TX located oil refinery that has a throughput capacity of 73,000 barrels per day. The finished refined output of the partnership is marketed at West Texas, Central Texas, Oklahoma, New Mexico and Arizona.

Alon USA Partners sports a Zacks Rank #1 (Strong Buy), implying the stock will significantly outperform the broader equity market over the next one to three months. The stock has gained a whopping 70.95% YTD.

Valero Energy Corporation (VLO - Analyst Report)

San Antonio, TX-based Valero Energy is the largest independent refiner and marketer of petroleum products in the U.S. It has a refining capacity of 2.9 million barrels per day across 15 refineries located throughout the U.S., Canada and the Caribbean. Valero is also a leading ethanol producer with 11 ethanol plants in the Midwest, with a combined capacity of 1.3 billion gallons per year.

The company holds a Zacks Rank #2 (Buy) and has gained 42.67% YTD.

Northern Tier Energy LP (NTI - Snapshot Report)

Headquartered in Tempe, AZ, Northern Tier is an independent downstream energy firm. The partnership is engaged in refining, retail, and pipeline operations in the United States. Because of its downstream business, the firm is likely to benefit from the current commodity price environment.

The player holds a Zacks Rank #1 and has scooped up 15.76% returns YTD.