(Bloomberg) -- European natural gas moved higher as traders weighed winter risks against relatively muted demand and ample supplies in the short-term. 

Benchmark contracts reversed earlier losses, following stronger oil and broader financial markets higher. 

Separately, the US imposed sanctions on Russia’s Arctic LNG 2 project, which is set to launch its first production train later this year. That’s further clouding the outlook for global supplies of liquefied natural gas this winter, as the development was among just a handful of plants scheduled to bring additional volumes in the coming months. 

Officials remain cautious even though the market looks well-supplied for the time being, with rising LNG flows, recovering Norwegian output and virtually full stockpiles. Europe is still trying to bolster its energy security after last year’s crisis. With the market staying tight, geopolitical tensions running high and the entirety of winter yet to come, prices remain volatile. 

“We are much, much better prepared than we were twelve months ago,” Germany’s Federal Network Agency President Klaus Mueller told the Sueddeutsche Zeitung newspaper. “If we get a normal winter, there should be no major problems.” However, it’s “still too early to sound a complete all-clear,” he added.

The Israel-Hamas war also continues to loom over energy markets — even though the conflict hasn’t had a major impact on global gas flows so far.

“We are slightly misleading ourselves that the worst is over,” Niall Trimble, managing director of consultants Energy Contract Co., said at an FT event in London this week. The market will remain “a bit bumpy” until a new wave of global LNG supply kicks in around 2027, he said.

Dutch front-month gas, Europe’s benchmark, traded 2.8% higher at €49.10 a megawatt-hour by 5:31 p.m. in Amsterdam. The UK equivalent futures rose 3%. 

Day-ahead prices in both hubs also advanced. That followed two days of declines, with Storm Ciarán moving through the northwest with intense winds, reducing the need to burn fossil fuels for power in the immediate term.

--With assistance from Iain Rogers.

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