The Energy Investment Picture

We say oil prices will be lower for longer,said Fadel Gheit,senior energy analyst at Oppenheimer&Co.Fundamentally,supply is still ample and exceeds the demand.The demand picture is weak.I actually say,sell oil stocks on a spike;buy them on dips.*
On the good side,you've got the industry bellwether Schlumberger,adds Ken Sill,managing director and senior oilfield services analyst of Global Hunter Securities.Halliburton is doing well.Superior Energy has good balance sheets and is growing internationally.*
Chevron,the second largest US oil company,is laying off 1500 workers,or 2% of its workforce,as part of an effort to cut costs by a billion dollars to offset the decline in the price of oil.Prices have sunk about 55% in the past year on oversupply.Most of the layoffs will be in Texas,where Chevron has holdings in the Permian Basin shale formation,and California,where its headquarters are located.
In light of the current market environment,Chevron is taking action to reduce internal costs in multiple operating units and the corporate centre,Chevron spokeswoman Melissa Ritchie stated.These initiatives,which are currently underway,are focused on increasing efficiency,reducing costs and focusing on work that directly supports business priorities.*
The Chevron layoffs include 50 international staff;600 contractor positions;500 positions from the San Ramon,California headquarters;and 270 open positions that won't be filled.
The consensus seems to be that now is a good time to buy the stocks of these basically sound companies that are going at bargain rates.
Chevron (CVX);Halliburton (HAL);Schlumberger (SCHL);Superior Energy (SPN)

Greek Debt Worries;Oil Optimism

The Greek finance minister expressed doubts about being to repay its big loans,although it can manage its public sector expenses.We will definitely have problems in making debt payments,said Yanis Varoufakis to Alpha Radio.Greece has an IMF loan of 1.6 billion euros comig due in March;i also has 7.5 billion of ECB bonds coming to maturity in July and August.
This skepticism comes after Greece got a four-month bailout extension from the EU on Tuesday.Any major Greek credit problems could roil world financial markets.*
In the port of Jizan,Saudi Arabia,Saudi oil minister Ali al-Naimi voiced optimism to reporters.The oil markets are calm now,and demand is growing,according to Mr.al-Naimi.
As well,China's manufacturing sector is growing,according to the flash HSBC/Markit Purchasing Managers Index.China is the world's second-largest energy consumer after the US.
The cheery news caused Brent crude to soar 5% to 61.63 per barrel;while Cushing crude went up 1.71 to 50.99.*
iShares China Large-Cap ETF(FXI),iShares U.S. Oil&Gas Exploration&Production ETF(IEO)

What Investors Need Today

What you need is stable earners with big cash flow,advised Ashok Shah,investment director at London&Capital.Later,as QE approaches,you can take another look.*
I think the Russia/Ukraine situation is going to drag on for months to come.Until there is a definite economic impact,I think the market will look right through it.*
The bond market is saying the economic outlook,especially in Europe,is poor.We're already seeing Italy going back into recession in the second quarter.The underlying problem is deflationary pressures.That's going to restrain any recovery in the economic growth rate.I think we have to be used to very high levels of unemployment for long periods of time,until there is proper restructuring.I think the brain drain from the UK and Europe is going to continue for a long period of time,Mr.Shah predicted.*
The way we're going to quantify Russia and Iraq is,if you cut drilling in Iraq and Russia,you're going to cut drilling numbers for the oil service industry,CNBC host Jim Cramer noted.*
China is just not liking us at all with its antitrust policy.Look at Applied Materials.It's down 10-20% because of China.China's cracked down on Cisco.China's playing with us,dumping their steel.Who's spending in China? Amazon.Look out,PRC,Amazon's coming,Cramer warned.*
Amazon(AMZN)

Russia and the Impact on Markets

BP has done a good job of getting cash flow out of their asset base,said Matthew Beeseley of Henderson Global Investors.We hold some of it.The company is throwing off lots of cash,but there are risks in their partnership with Russian energy titan Rosneft.*
For now,the markets have thrown off Russia/Ukraine and Syria.We're certainly concerned about the low levels of volatility across the markets.It's not normal,and at some point,one would expect the markets to normalise.The optimism has really been found in the US and the emerging markets.The glass has been half empty in Europe and Japan.*
We're exposed to a company called Epam Systems Inc,a computer outsourcing firm.It has one third of its workers in Ukraine.We want a high level of conviction about our holdings.Across parts of Russia,it's hard to invest because of the lack of a high level of conviction.*
Current sanctions on Russia are on future debt and equity.Sanctions on present debt and equity would have a major impact.*
Investors are being paid to be complacent,and when the Fed raises rates in six months to a year,geopolitical risk will begin to be factored in,Mr.Beeseley cautioned.

The Health of Markets:The View From Barclays

The US equity market is the market that we probably worry about most,said Jim McCormick,Barclays' Global Head of Asset Allocation.Valuations are starting to get stretched.Inflation is starting to be a problem.The truth is,inflation in the U.S. is picking up and is a trend likely to be sustained.If we are going to get a correction,the US equities are the most likely place.*
The message we have on emerging markets is,the macro picture is improving.Risk premia are higher than thery were a year ago.The asset calss we prefer is equities.We like Asia ex-Japan,Poland,India.The Indian budget is going to be very important.We're positive on India across the board.*
We've been increasingly bullish on commodities this year.Oil is attractive on all levels.If you look at the bottoms up on oil,it's been looking up for a long time,Mr.McCormick observed.

Western Australia Drawing Increased Interest

Exxon Mobil and BHP Billiton plan to develop a vast natural gas field about 300 kilometers off the coast of Western Australia using a huge gas processing vessel for liquefied natural gas production.The floating plant would produce 6.7 million metric tonnes of LNG a year beginning in 2020-21,the companies said in a filing with Australia's environment department.
The Scarborough field is located in the Carnarvon Basin.The vessel proposed to operate there would employ Floating LNG technology,or FLNG.It is used when gas fields are too small or remote to make onshore facilities practicable.
In a related development,the US State Department has opened a commercial office in its Perth consulate.The office will match an expected surge of US companies looking to invest in Western Australia with local firms which can meet their needs as resource extraction activities ramp up in response to demand from emerging Asia.
Canadian real estate investment trust Brookfield Office Properties lists Perth as a high growth market,ahead of Boston and Vancouver.The REIT owns Brookfield Place in Perth and has a 50% interest in two other office buildings on St Georges Terrace.
Exxon Mobil(XOM),BHP Billiton Ltd(BHP),Brookfield Office Properties(BPO)