AWAITING OIL'S CENTURY

After oscillating in the ninties for quite some time like Sachin Tendulkar, the crude oil went tantalisingly close to its century(100) today as it tocuhed 99.23 before retreating a bit(it is trading at 98.03 as I write this post)The main reason given for this is the weakening U.S.Dollar apart from the technical factors. There is also a consistent rumour that the GCC countries like Saudi Arabia and Qatar are likely to change their Forex reserve composition from 100% U.S Dollar to a lesser percentage to minimise the risk of the fall in their Forex value due to the fall in Dollar. If they take a decison like that, then they have to sell U.S.Dollar which will further weaken it. Actually this is what Saddam Hussain wanted to do long back and made a failed attempt in bringing a consensus among the arab nations. He told them that if the oil producing arab nations start taking euros instead of dollars the U.S will not show its might all around and that was one of the important reasons why Mr.Bush wanted to keep Saddam Hussain in check and so built stories that Iraq possessed weapons of mass destruction which was ultimately proved to be baseless and false. But this time it is not only the Gulf nations but also China which holds the largest amt of Forex reserves in U.S dollars that wants to move away from U.S.dollar at least partially. With its economy already in the brinks of recession, the U.S Fed is now caught between rock and hard surface. If it does not cut interest rates then there will be more and more defaults on the housing loans which is already estimated to see a loss of 300billon dollars. On the other hand if it cuts interest rate to ease the liquidity situation, then the dollar will weaken further and inflation will go up.This is making a lot of anti-america nations like Venuzuela and Iran, not to miss mentioning a lot of individuals, happy.
As I wrote this article, I changed the oil price thrice - from 98.03 to 98.30 to again 98.65. May be by the time you read this post, OIL might have hit the CENTURY.