Crude oil prices should bounce back once global markets regain confidence after last week's startling downgrade of the United States' credit rating, the oil minister of OPEC-member Kuwait said Sunday. US light crude dived to a low of $82.87 a barrel, its lowest level since November 2010, after the world's largest economy lost its top-notch AAA credit rating from Standard & Poor's on Friday, before better-than-expected US jobs growth data drove a modest recovery to $86.88. “We hope that this drop (in oil markets) does not last for a long time and we start seeing international markets recovering gradually ... after the panic we have seen from the situation in the US and Europe,” Mohammad Al-Busairi told Reuters in an interview. Oil prices rose above $82 a barrel Wednesday in Europe after the US central bank said it will keep lending rates at record low levels for the next two years. Benchmark oil for September delivery was up $2.98 to $82.28 a barrel at mid-day Paris time in electronic trading on the New York Mercantile Exchange. Crude fell $2.01 to settle at $79.30 on Tuesday. In London, Brent crude was up $3.52 at $106.09 per barrel on the ICE Futures exchange. The Paris-based International Energy Agency said sustained high oil prices and slowing economic growth have “dramatically curbed” global oil demand in recent months. The IEA trimmed its forecast for global oil demand this year to 89.5 million barrels a day on average, or 60,000 barrels a day fewer than the IEA's previous forecast, saying increased evidence of economic slowdown has raised fears of a double-dip recession. In its report Wednesday the IEA said “concerns over debt levels in Europe and the US, and signs of slowing economic growth in China and India have spooked the market and raised fears in some quarters of a double-dip recession.” The IEA's new forecasts put demand this year at 89.5 million barrels per day, up 1.2 mbd or 1.4 percent from 2010, with 2012 rising to 91.9 mbd, up 1.6 mbd or 1.8 percent from this year. Should global economic activity slow by more than expected, however, the demand figure for this year would be cut by 0.3 mbd and next year by 1.3 mbd. Kuwait's crude output averaged 2.6-2.7 million barrels per day (mbpd) in July, peaking at 2.8 mbpd some days, Busairi said, adding that Kuwait's output in August would depend on demand. Kuwait was the world's sixth largest oil exporter in 2010 and the government relies heavily on oil revenues. In June, Kuwait's parliament approved a 19.4-billion dinar ($70.9 billion) budget for the 2011-12 fiscal year, the country's biggest since at least 2003, based on a conservative oil price estimate of $60 per barrel.
