Jittery Times For 8 Energy Companies

By Meagan Clark - Companies exposed to Russia and Ukraine are watching their shares fall Monday, and energy companies are among the most affected after Russia authorized more military presence in Ukraine.

Here are eight energy companies to keep an eye on as the political tension between Western nations and Russia evolves.
BP
Bob Dudley, BP (NYSE:BP)’s chief executive, is a board member of Rosneft, an oil producer giant primarily owned by the Russian government.
For almost 10 years, U.K.’s BP owned half of one of Russia’s largest oil producers, TNK-BP. Then in 2012, BP sold its stake in the company to Rosneft, which left BP with nearly 20 percent of Rosneft’s shares. The public owns nearly 11 percent, and the Russian government owns the rest, about 70 percent.
Rosneft contributed $1 billion to BP’s underlying profit, 35 percent of total profit, in BP’s fourth quarter.
Royal Dutch Shell
Anglo-Dutch company Royal Dutch Shell (NYSE:RDS.A) has a stake in a liquefied natural gas project in the Russian Far East, Sakhalin 2, and last month, began drilling in Siberia with Gazprom Neft, a Russian oil producer. The two companies plan to use multi-fracturing technology in the Siberian shale, similar to the Bakken shale in North Dakota. Shell is also operating joint projects in the Russian Arctic.

© REUTERS. Russia's Rosneft and Texas-based ExxonMobil signed an oil and gas exploration agreement in 2011.

ExxonMobil
After three years of declining output, Texas-based ExxonMobil (NYSE:XOM) is also exploring for oil in the Russian Arctic, in a joint venture agreement with Rosneft. Exxon also plans to begin a $300 million pilot project drilling in Siberia’s Bazhenov shale with Rosneft this year.
ENI
Italian-owned ENI is exploring oil offshore in the Arctic with Rosneft and is planning an undersea natural gas pipeline in the Black Sea with Gazprom, the Russian natural gas extractor. The Italian company calls itself the biggest buyer of natural gas from Gazprom and a major customer of Rosneft.
Statoil
Like Exxon and ENI, Norwegian-owned Statoil (NYSE:STO) has also signed a joint venture agreement with Rosneft to explore for oil in Russia’s Arctic. Statoil is paying for all costs of operation, which could range from $65 billion to $100 billion over decades, while Rosneft may get stakes in Statoil projects.
Total and China’s CNPC
French oil and gas corporation Total (NYSE:TOT) and China National Petroleum Corporation (CNPC), state-owned and China’s largest integrated energy company, each own one fifth of Yamal LNG, a project in northern Russia. Novatek, an independent Russian gas producer partly owned by a longtime acquaintance of Russian President Vladimir Putin, holds a 60 percent stake in the project.
Fortum
Finland’s largest utility company, Fortum, sells heat and electricity in Russia’s industrial regions. About a quarter of Fortum’s 2016 earnings are expected to come from Russia, according to Deutsche Bank

U.S. stocks drop as Ukraine crisis frays nerves; Dow drops 0.94%

Investing.com - U.S. stocks dropped on Monday as investors ditched risk-on asset classes such as equities and flocked to safe-harbor dollar and yen positions despite better-than-expected U.S. factory and personal spending data.

At the close of U.S. trading, the Dow Jones Industrial Average fell 0.94%, the S&P 500 index fell 0.74%, while the Nasdaq Composite index fell 0.72%.
Stocks fell due to the Russian standoff over the Ukraine.
Russian President Vladimir Putin over the weekend sent troops into the Crimea region.
The move sparked fears that the West will impose sanctions on Russia. Russia’s central bank hiked interest rates from 5.5% to 7% on Monday after the rouble fell to new record lows against the euro and dollar, the latter of which served as the asset class of choice over stocks.
Solid U.S. data did little to boost spirits on Wall Street.
The Commerce Department reported earlier that personal spending rose 0.4% in January, above expectations for an increase of 0.1%. Personal spending for December was revised down to a 0.1% gain from a previously reported increase of 0.4%.
The report added that personal income rose 0.3%, beating expectations for a 0.2% increase, after a flat reading in December.
Meanwhile, the core PCE price index inched up by a seasonally adjusted 0.1% in January, in line with expectations, after rising 0.1% in December.
The core PCE price index rose at an annualized rate of 1.2%, above forecasts for a 1.1% increase, after rising at a rate of 1.1% in December.
Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.
Elsewhere, the Institute for Supply Management revealed that its manufacturing purchasing managers’ index rose to 53.2 last month from 51.3 in January, beating forecasts for a reading of 52.0.
The report attributed the rise to an increase in new orders after rough winter weather disrupted commerce at the start of the year.
Leading Dow Jones Industrial Average performers included Home Depot, down 0.06%, AT&T, down 0.20%, and United Technologies, down 0.21%.
The Dow Jones Industrial Average's worst performers included Visa, down 2.04%, 3M, down 1.90%, and Walt Disney, down 1.68%.
European indices, meanwhile, finished lower.
After the close of European trade, the EURO STOXX 50 fell 2.94%, France's CAC 40 fell 2.66%, while Germany's DAX 30 fell 3.44%. Meanwhile, in the U.K. the FTSE 100 fell 1.49%

Forex - Euro hits session lows vs. dollar after ISM report

Investing.com - The euro fell to session lows against the dollar on Monday after data showed that manufacturing activity in the U.S. expanded at a faster rate than expected in February, while concerns over the crisis in Ukraine also continued to support demand for the dollar.

Euro touches session lows against dollar

EUR/USD hit lows of 1.3747 and was last down 0.35% to 1.3753.
The pair was likely to find support at 1.3730 and resistance at 1.3800.
The dollar was boosted after the Institute for Supply Management reported that its manufacturing purchasing managers’ index rose to 53.2 last month from 51.3 in January, ahead of forecasts for an increase to 52.0.
The report attributed the rise to an increase in new orders after bad weather caused disruption at the start of the year.
The euro remained under pressure as escalating tensions over the unfolding crisis in the Ukraine sparked a broad based selloff in risk assets, following Russian President Vladimir Putin’s decision to send troops into the Crimea region over the weekend.
Ukraine's interim government has called for more international support to force Russian troops to leave.
The move sparked fears that the West will impose sanctions on Russia. Russia’s central bank hiked interest rates from 5.5% to 7% on Monday, after the rouble fell to new record lows against the euro and dollar.
In the euro zone, data on Monday confirmed that the region’s manufacturing purchasing managers’ index declined to 53.2 in February from 54.0 in January. It was the first dip in five months, highlighting the fragile nature of the recovery in the euro area.
The rate of decline in France’s manufacturing sector eased in February, while activity in Germany’s manufacturing sector rose for the eighth straight month.
The single currency’s losses were held in check after euro zone inflation data late last week eased pressure on the European Central Bank to tighten monetary policy at its upcoming meeting on Thursday.
The euro was lower against the broadly stronger yen, with EUR/JPY down 0.71% to 139.47.
The common currency fell to its lowest level in more than a year against the Swiss franc, with EUR/CHF hitting lows of 1.2103, the weakest since January 2013, before pulling back to 1.2124.
The euro was also lower against the pound, with EUR/GBP slipping 0.11% to 0.8224.
Sterling found support after data on Monday showed that the strong upswing in the U.K. manufacturing sector continued in February, with jobs growth in the sector accelerating to a 33-month high.
The Markit U.K. manufacturing PMI for February came in at 56.9, up from a revised 56.6 in January. Analysts had expected the index to tick down to 56.5.

What Russia's Central Bank Is Doing To Support The Ruble

By Moran Zhang - Russia’s central bank on Monday unexpectedly hiked its main interest rate by the most since 1998 after the ruble hit an all-time low, as investors grew fearful over the consequences of military action in Ukraine.

What Russia's Central Bank Is Doing To Support The Ruble

Bank Rossii raised the key lending rate -- the one-week repurchasing agreement -- to 7 percent from 5.5 percent. The decision “is meant to avoid emerging risks to inflation and financial stability associated with the recently seen increased volatility on the financial markets,” Bank Rossii said in a statement. The central bank described the move as "temporary." The board will meet March 14 as planned, according to the statement.

© Reuters. A man passes by a currency exchange office in Moscow, March 3, 2014.

"The move by the central bank underlines that Russia’s economy is not quite as immune to external shocks as many seem to assume," Neil Shearing, chief emerging markets economist at Capital Economics, said in a note.
"Admittedly, the current account is in surplus and foreign exchange reserves are substantial, currently $499 billion," Shearing said. "But by the same token, the current account surplus is diminishing quickly and, more importantly, was outweighed by capital outflows last year."
Putin gained parliamentary approval to send troops into Ukraine over the weekend, triggering an immediate response by Ukraine, which accused its neighbor of declaring war. European and U.S. leaders have threatened sanctions against Russia. This, combined with the rate hike, may put pressure on the already flagging economy. In 2013, Russia’s economic growth slowed to 1.3 percent, its weakest pace since Putin came to power in 2000.
Rising tensions have scared investors out of Russian assets alike, fueling a rush to safe-haven currencies.

© Societe Generale. RUB and CNY valuations are still extreme.

“The market reaction suggests uncertainty but not fear that the crisis will spread much more widely,” said Kit Juckes, currency strategist at Societe Generale, in a note. He added in his note that the yen is so far the winner, while the ruble is among the losers.
“These trends are likely to continue for now, despite the 150 basis points rate hike announced this morning by Bank Rossii,” Juckes said. “Russia is unlikely to back down in its support of the regional government in Crimea.”

Dollar gains on solid U.S. manufacturing, personal spending data

Investing.com - The dollar firmed against most major currencies on Monday after solid U.S. factory and consumer spending reports sparked a rally, while unease over the Ukraine crisis fueled safe-haven greenback demand as well.

In U.S. trading on Monday, EUR/USD was down 0.50% at 1.3733.
The Commerce Department reported earlier that personal spending rose 0.4% in January, above expectations for an increase of 0.1%. Personal spending for December was revised down to a 0.1% gain from a previously reported increase of 0.4%.
The report added that personal income rose 0.3%, beating expectations for a 0.2% increase, after a flat reading in December.
Meanwhile, the core PCE price index, which is stripped of food and energy items, inched up by a seasonally adjusted 0.1% in January, in line with expectations, after rising 0.1% in December.
The core PCE price index rose at an annualized rate of 1.2%, above forecasts for a 1.1% increase, after rising at a rate of 1.1% in December.
Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.
The Federal Reserve pays close attention to personal income and spending when deciding the fate of monetary policy, and Monday's data prompted investors to assume the U.S. central bank will continue scaling back its monthly asset purchases as the year progress.
Fed asset purchases, currently set at  $65 billion a month in Treasury and mortgage debt, aim to spur recovery by suppressing long-term borrowing costs, which weakens the dollar as a side effect by sending investors to stocks in hopes investing and hiring accompany rising equity prices.
The dollar also saw support after the Institute for Supply Management revealed that its manufacturing purchasing managers’ index rose to 53.2 last month from 51.3 in January, beating forecasts for a reading of 52.0.
The report attributed the rise to an increase in new orders after rough winter weather disrupted commerce at the start of the year.
The euro, meanwhile, came under pressure as escalating tensions over the crisis in the Ukraine sparked a broad-based selloff in risk assets.
Russian President Vladimir Putin over the weekend sent troops into the Crimea region.
The move sparked fears that the West will impose sanctions on Russia. Russia’s central bank hiked interest rates from 5.5% to 7% on Monday after the rouble fell to new record lows against the euro and dollar.
In the euro zone, data on Monday confirmed that the region’s manufacturing purchasing managers’ index declined to 53.2 in February from 54.0 in January. It was the first dip in five months, highlighting the fragile nature of the recovery in the euro area.
The rate of decline in France’s manufacturing sector eased in February, while activity in Germany’s manufacturing sector rose for the eighth straight month.
Elsewhere, the dollar was down against the yen, with USD/JPY down 0.35% at 101.43, and up against the Swiss franc, with USD/CHF up 0.34% at 0.8834.
The greenback was up against the pound, with GBP/USD down 0.51% at 1.6660.
In the U.K., data revealed that a strong upswing taking place in the U.K. manufacturing sector continued in February, with jobs growth in the sector accelerating to a 33-month high.
The Markit U.K. manufacturing purchasing managers’ index for February came in at 56.9, up from a revised 56.6 in January. Analysts had expected the index to tick down to 56.5.
A separate report showed that the number of mortgages approved in the U.K. rose to 76,947 in February, the highest level since November 2007, from 72,798 in January.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.15% at 1.1080, AUD/USD up 0.03% at 0.8930 and NZD/USD down 0.20% at 0.8367.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.35% at 80.08.