European natural gas gave up earlier gains, with traders weighing if government steps to contain the energy crisis would be enough to stave off rationing and blackouts this winter. 

Benchmark futures fluctuated after jumping as much as 12% earlier amid market uncertainty, with the official start of the heating season just weeks away. 

The European Commission’s radical intervention plan includes raising 140 billion euros ($140 billion) for consumers from energy companies’ earnings, as well as mandatory curb on peak power demand and boosting liquidity. But member states, which have to sign off on the Commission’s plans, are still divided on the details. 

“These temporary measures should go a long way in helping the EU’s population through the winter,” Rystad Energy said in a note. “Even so, many details need to be worked out for the plan – if approved – to be effective.”

A proposal to cap prices of imported gas was ditched for lack of consensus. The plans also didn’t include any solutions on how to add supply to a market that’s been tight ever since Russian shipments were cut. Germany’s energy regulator warned the country may face “waves” of shortages in the event of a cold winter.

Focus will remain on storage levels. European inventories are about 84% full, slightly above the five-year average, with 89% in Germany, according to Gas Infrastructure Europe. Effective demand reduction measures will be increasingly important should there be a situation of acute energy shortage, said Stefan Ulrich, an analyst at BloombergNEF.

Weather forecasts point to cooler temperatures in parts of Europe for the end of September, which is causing concerns in the market about an increase in demand, analysts at trading firm Energi Danmark said in a note.

“Europe will start seeing some heating demand picking up now,” said Niek van Kouteren, a senior trader at Dutch energy company PZEM NV. “If we do see a prolonged colder period though, that will really start impacting prices, and you might already have to start withdrawing some storages.”

Volatile Prices

The Dutch front-month gas, a benchmark for Europe, was 2.1% lower at 213.25 euros per megawatt-hour by 5:05 p.m. in Amsterdam. The contract rose 14% in the previous two sessions. The UK equivalent increased as much as 13% before flipping to losses. 

European gas prices are about eight times higher than their typical levels for this time of the year, putting immense strain on the economy and household budgets. 

The German government is ready to take a stake in a second domestic gas supplier -- VNG AG -- to contain a worsening crisis that’s already prompted talks on the potential nationalization of energy giant Uniper SE.

Factories that make everything from metals to fertilizers have been cutting gas consumption by curbing production or even shutting down facilities. Gas at around 190 euros per megawatt-hour during the winter would be enough to drive a demand drop of at least 14% across sectors during the coldest months, according to BloombergNEF’s Ulrich.

Benchmark German year-ahead power rose as much as 7.4% to 555 euros per megawatt-hour before trimming some gains.