European natural gas prices reached their highest level of the year on Thursday, raised by strong demand and rising geopolitical risks, particularly Russia's increased attacks against Ukraine's energy infrastructure and fears that escalating tensions in the region could disrupt gas flows.

Ukraine fired British cruise missiles into Russia on Wednesday, the latest Western weapon it has been permitted to use in such a way, a day after it fired U.S. missiles; Russia responded Thursday with the launch of an intercontinental ballistic missile at Ukraine, the first time it has used such a powerful, long-range missile during the war.

Investors also are watching Russian pipeline flows to Europe after Kremlin-controlled Gazprom stopped supplies to Austrian gas importer OMV (OTCPK:OMVJF).

Despite the dispute, Russia's natural gas exports through Ukraine to Europe have remained stable; Gazprom said it would send 42.4M cm of gas to Europe via Ukraine on Thursday, the same volume it has shipped each day since November 12.

The benchmark Dutch TTF contract recently traded +1.9% to €47.69/MWh, and is up nearly 20% so far in November.

Meanwhile, European Union gas storage is currently 89.9% full, below the five-year average of 91% for this time of year.

"With storage not as high as initially expected going into the winter and a number of supply risks, speculators continue to favor gas from the long side," ING analysts wrote.

Exports of U.S. liquefied natural gas to Europe are expected to rise this week as traders take advantage of more attractive gas prices.

According to Kpler, exports will reach 1.23M metric tons, up from 930K tons last week and 670K tons the first week of November, while the number of LNG shipments expected to discharge at European terminals are forecast to increase to 18 cargoes from 15 cargoes last week.

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