European natural gas prices roared to a record before slumping just as quickly, as the market faced extreme volatility amid the war in Ukraine.

Benchmark Dutch futures settled 2.9% lower at 160.82 euros a megawatt-hour after earlier surging to almost 200 euros. At one point the contract also dropped as much as 18%. The U.K. equivalent fell 2.5%, also following an earlier climb and subsequent slump.

On an intraday level, European gas futures have traded within a range of about 100 euros this week. 

“This volatility is unprecedented,” said Kaushal Ramesh, a senior analyst at Rystad Energy. “Within the TTF market, there’s probably some level of profit-taking once that’s very high and it has an impact on sentiment,” he added, referring to the Dutch benchmark.

Russia’s invasion of Ukraine and sanctions aimed at Moscow have added risk to an already tight European market for the fuel. The conflict has upended commodities, with the world already in the grip of inflation amid the recovery from the pandemic. 

Meanwhile, European competition with Asia for liquefied natural gas has boosted prices ever-higher. The rally in Europe helped push Asia spot prices to a fresh record, and Asian buyers considering alternatives to Russian supplies. 

Europe has imported more LNG than usual this year. While imports could help reduce the continent’s reliance on Russian gas, buyers remain in competition with those in Asia as they start to replenish their stocks over the summer. 

Flows Via Ukraine

The Russian assault on Ukraine shows no signs of letting up as the war enters its second week. Officials from Russia and Ukraine were holding a second round of talks on Thursday. U.S. Secretary of State Antony Blinken was traveling to NATO member states neighboring Ukraine.

While sanctions on Russia don’t specifically target natural resources, traders and shippers are shying away from dealing with the country’s suppliers, including Gazprom PJSC’s energy-trading arm. 

Still, Russian gas continues to flow through pipelines to Europe, including those crossing Ukraine, even increasing since the invasion. Both sides reiterated Thursday that fuel transit continues. In addition, Gazprom may add supplies to Germany on Friday via the Yamal-Europe link, which runs through Belarus and Poland, based on its pipeline bookings.

More than a third of Europe’s gas comes from Russia, the continent’s biggest supplier. About a third of those volumes are shipped via Ukraine.