There are doubts if the global economy could still be exposed to decelerating growth, whilst recession fears could limit upside potential in energy markets in general.
Wael Makarem, Senior Market Strategist – MENA at Exness warned, that natural gas markets may be exposed amid the period of cold months in Europe.
Makarem said, “Oil markets are heading higher thanks to hopes of greater demand from China as the country continues to reopen. Demand has previously been strongly impacted by the strict sanitary restrictions imposed due to the zero-covid policy.
“At the same time, some doubts remain as the global economy could still be exposed to decelerating growth. Recession fears could limit upside potential in energy markets in general.
“It remains to be seen how the Chinese economy would rebound and to which extent the reopening would reinvigorate industrial activity. In this regard, the government has issued higher oil import quotas earlier than usual this year in a bid to boost economic activity.
“Stronger demand from China could balance out the decreases seen elsewhere, helping the oil market maintain a stable if not more positive outlook.
“Natural gas on the other hand could continue to see downward pressures as warmer winter temperatures in Europe have limited demand. Europe has been the source of strong demand in 2022 as the conflict in Ukraine and sanctions on Russia have disrupted supplies.
“As a result, natural gas markets could remain exposed to unexpected changes in temperatures during the remaining period of cold months in Europe.
“Additionally, prices could be affected momentarily in case of transport and supply issues as was the case multiple times in 2022 in Eastern Europe and Turkey.”