The Euro Zone Financial Crisis and Liquid Energy Futures

Crude, along with heating oil and mogas bounced dramatically off yearly lows, rising 10% last week.
Could the bottom be in on liquid energy and the endless bid on petroleum futures resume its relentless upward march?  The answer will mostly depend on the collateral damage that will ensue to euro zone banks on the eventual default of Greek sovereign debt.

The European Central Bank, International Monetary Fund and European leader's are desperately trying to calm market fears by buying up bonds of floundering euro members, notably Greece. The actions appeared to have calmed investors last week as the euro gained versus the US dollar and other currencies. 

Will they be able to continue with the bond buying? Juergen Stark voiced his opinion by resigning his executive board position on the European Central Bank.  Mr. Stark was furious that the ECB has drifted from its original mandate of fighting inflation to bailing out weak euro countries.

Juergen Stark is not alone in is dissension to fighting the European sovereign debt crisis by running the monetary printing presses. The hard working people of Germany have had enough of seeing their tax burdens increase well into the future in order to fund bailouts for less hard working Southern euro countries. The turmoil among Germans is likely to increase should it become necessary to include Italy, Portugal and possibly even Spain into the bond buying program.

The end result of the European debt crisis is largely unknown. Europe may be able to delay the Greek debt default just long enough to allow Euro zone banks to build enough equity to mitigate collateral damage. Hopefully, this will contain the fallout from spreading into the worldwide banking system.
On the other hand, if euro banks are already too leveraged to build equity quickly over the coming months, there is the possibility that the contagion will spread resulting in a possibly worse banking crisis than was experienced in 2008.

Traders will be best served by tuning in closely to the developments that ensue from European leaders over the coming weeks. When the crisis has finally passed, normal seasonal trends will resume, with the most tradeable and reliable seasonal trend, rising gas futures from early January into April.