(Bloomberg) -- European natural gas prices trimmed earlier losses as traders continued to eye a possible escalation of the Middle East conflict while Western countries intensify efforts to stop the war from spilling over into the wider region.

Benchmark futures moved slightly higher after falling as much as 6.4% earlier on Monday. The contracts are still about 30% higher than where they were before the Oct. 7 attack on Israel by Hamas, which is designated a terrorist group by the US and European Union. Traders are watching every headline on how the situation in the region develops amid risks that it could impact fuel flows.

Israel Latest: Military Hits Gaza With Airstrikes and Raids

Israel continued with airstrikes on Gaza Monday, but appeared to delay a ground invasion as diplomatic efforts continue to free more hostages. Meanwhile, most of Europe is expected to see milder temperatures than usual until early November, according to forecaster Maxar Technologies Inc., which could help to contain heating demand in the short term. Europe’s gas inventories are nearly full, and demand remains below average after last year’s energy crisis forced companies and households to cut usage.

“Gas has settled into a range of around €50 with ample supply and mild weather offsetting Middle East related supply risks,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S. “Energy prices are generally lower as Israel holds off invasion, but it’s very difficult to price a not-yet-realized disruption.”

Traders are also following a recent wave of new long-term liquefied natural gas supply deals that reflect a growing recognition that the fuel will be required for longer than previously anticipated to complement adoption of renewable energy. Italy’s Eni SpA signed a 27-year LNG agreement for deliveries from a project in Qatar, following a similar Shell Plc deal last week for delivery to the Netherlands.

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Dutch front-month futures, Europe’s gas benchmark, rose 1.2% to €51.70 a megawatt-hour at 5:32 p.m. in Amsterdam. The UK equivalent contract also gained. 

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