Could a US Default Push Oil Prices Above $130? ‎

Oil, priced in dollars, tends to move higher as the U.S. dollar falls, and vice-versa. It’s a result of oil traders trying to maintain their “purchasing power” in the event of a weaker dollar. Oil closed Friday down $1.58 to $95.86 per barrel.

Now if Democrats and Republicans in Washington can’t reach a debt deal agreement and the U.S. Government defaults on its debt, the dollar may very well decline, boosting oil’s price.

So far in the debt crisis, the dollar has held its own versus the euro, trading at $1.4410, but has declined versus the yen, to 76.84 yen, and the Swiss franc, to 0.7856 cents.