Oil prices will rise again soon even if they fall further in the short-term because governments have no other tools to combat slow growth other than further ease monetary policies, leading commodities trading banks said on Monday. "For many governments, monetary policy could be the only tool for expansion. Given the broad supply constraints in this (oil) sector, an extensive monetary response would create a rather positive backdrop for commodities," Bank of America Merrill Lynch said in a research note. Another major commodities bank, Goldman Sachs, said it was still positive on several commodities including Brent oil. Oil prices fell over $3 to near $83 a barrel Monday after Standard & Poor's downgraded the US's credit rating - a blow to confidence that could hurt economic growth and demand for crude. Benchmark oil for September delivery was down $3.52 to $83.36 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 25 cents to settle at $86.88 Friday. In London, Brent crude was down $3.58 at $105.79 per barrel on the ICE Futures exchange. "Several factors are leading us to keep our constructive commodity views over the next year intact, including still-high expectations of global GDP growth sufficient to tighten key commodity markets, expected strong growth in emerging markets - especially given the ability to reverse or ease tightening policy to buoy growth - and commodity supply disappointments," Goldman said in a note. "In a mild recession, we would expect to see Brent crude oil prices briefly breaking below $80 per barrel, only to gain back that level as OPEC turns the taps off," Merrill said.
