Europe Fears Cuts In Natural Gas From Russia

Despite the ongoing Ukraine crisis, a plethora of Western sanctions and a plummeting currency, amazingly Russian energy sector returns have risen by about 22 percent. “No other country comes close. Canada, another oil- and gas-heavy nation, has seen industry equity returns rise by just 1.8 percent this year, while the MSCI USA Index is up only 0.7 percent.

Why is Russia, which is fraught with geopolitical problems and currency issues, dramatically outperforming everyone else? In part, because its market dropped well before the oil crisis began.

Russian equities—prices and valuations—started to fall when the country entered Ukraine earlier last year. Between January 1 and March 14, 2014, the MSCI Russia Energy Index fell by 21 percent. So it was already cheap when oil prices started to crumble.” [CNBC]

Hedge funds raised their wagers on oil to a record high, speculating crude has further to fall as the supply glut keeps rising. “Money managers increased short positions in West Texas Intermediate crude by 17 percent in the seven days ended Feb. 24, U.S. Commodity Futures Trading Commission data show. Net-long positions slid to the lowest in seven weeks.

Stockpiles in the U.S. have risen for seven consecutive weeks to a record 434.1 million barrels. Domestic production is continually topping weekly records, reaching 9.29 million barrels a day during the report period, while an unprecedented decline in oil drilling rigs is showing signs of slowing.

“This tidal wave of crude oil is just too overwhelming,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone Feb. 27. “There’s no end in sight.” [Bloomberg Business]

A surge in demand for renewable energy in India and a large capital injection from the country’s second-wealthiest mogul will help wind turbine constructor Suzlon Energy become profitable after six years of losses. “Suzlon has been under pressure for a few years due to a slowdown in global sales and a surge in costs to service debt taken on in acquiring a German company in 2009, forcing it to restructure $1.8 billion of debt after a bond default in 2012.

“Next financial year we will be in profit … 100 percent,” Tulsi Tanti told Reuters on Tuesday. He also said the company had reduced a major portion of its debt through asset sales and could exit the debt restructuring programme within a year.” [Reuters]