Oil moved higher, reversing earlier losses in sympathy with equity indices in spite of concern that inventory reports will show climbing stockpiles. But financial markets this morning are showing rising concern over the yet unresolved sovereign debt crisis keeps pressure on the Euro.

With expectations for an increase to domestic crude stocks there appears to be growing consensus that economic growth is not going to be strong enough to eat into the existing surpluses. $74 looks to be a difficult barrier to surmount, with saeveral challenges having been rebuffed by lack of follow-on interest.

Hardly surprising with ten German banks potentially needing to raise 105 bn euros to meet requirements, renewing fears over how much European banks can withstand from debt and financial woes. Additionally, the cost of insuring against losses on Irish sovereign debt surged to a record on concern the government will struggle to support the nation’s banks.

Certtainly this will do little to help aggregate demand, energy demand in particular, in Europe and eventually the world beyond. Even the Chinese juggernaut will not be able to carry the worle out of recession.

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