European natural gas fluctuated in a sign of continued market jitters as traders monitor possible industrial action in Australia that could disrupt global supply.

Benchmark futures slumped as much as 7.7%, erasing an earlier gain. The contract surged 28% in the previous session, which was the biggest such move since March 2022.

The correction Thursday signals that traders are continuing to weigh bearish factors — including high inventories and sluggish industrial demand in Europe — against the possibility of supply interruptions and increased competition for liquefied natural gas.

Potential strikes at three major LNG in Australia could disrupt about 10% of global exports of the fuel. If industrial action goes ahead, it could make Asian buyers seek alternative supplies from outside the region, intensifying competition with Europe for the fuel.

“Any such strike could disrupt about half of Australia’s LNG export capacity and cause many Asian buyers to look elsewhere for their cargoes,” Zongqiang Luo, senior analyst at Rystad Energy, said in a note. “This price surge reflects the likelihood of the strike materializing, impacting LNG supplies during the ongoing heat waves, despite the ample gas inventories in Europe.”

The market is closely watching ongoing talks between labor unions and Chevron Corp. and Woodside Energy Group Ltd. Strikes could begin as soon as next week under labor rules.

Attention is also on heat waves in the Northern Hemisphere’s end of summer, which could boost demand for gas used for cooling. Total LNG inventory in Japan may have fallen below last year’s level due to more robust power demand, Rystad Energy said.

European LNG imports have already slipped from highs seen earlier this year, and competition for supply would increase when heating demand starts. Europe relies on LNG to fill gaps left by the loss of Russian pipeline gas, but that’s unlikely to be sufficient before 2025, according to Bloomberg Intelligence analyst Patricio Alvarez.

Europe’s gas markets have been extremely volatile in recent months, even as the region has accumulated robust inventories to cushion against supply shocks. Any sign of supply disruption can lead to price spikes, which could be even more pronounced when demand increases in winter.

Dutch front-month futures, Europe’s gas benchmark, slipped 5.41% to €37.67 a megawatt-hour at 9:30 a.m. in Amsterdam. UK equivalent also fluctuated.

“Looking ahead, we expect the bullish outlook for gas prices to continue with fewer LNG imports to Europe, planned maintenance for Norwegian pipelines and continued heat waves in multiple regions globally,” Rystad’s Luo said.