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(Bloomberg) — Persistent price swings in Europe’s natural gas market are limiting appetite among industrial companies to ramp up fuel usage, even after the worst of the region’s energy crisis has passed.

Implied volatility in benchmark Dutch gas — a measure of how expensive derivative contracts are — has subsided since the start of the year, signaling that confidence in the market is building. Still, it remains well above pre-crisis levels as price swings have become more common. With summer contracts trading higher than those for this winter, a substantial increase in industrial consumption appears to remain some way off.

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Volatility has become a dominant feature of Europe’s market as it transforms into an international hub for gas trading. That means the region is more exposed to global supply risks — from violence in the Middle East to liquefied natural gas production outages — even though it’s considered to be on relatively stable footing for the rest of this winter.

Read More: Europe Moves Into a New World After a Crippling Energy Crisis

“Bringing back industrial activity requires a degree of confidence that prices will stay steady and, recently, we have seen a wide range of possible outcomes, which makes hedging — particularly in options — very hard and expensive,” said Martijn Rats, global commodities strategist and head of European energy research at Morgan Stanley. “It’s not about the absolute price level, but the expected volatility in markets.”

Industry has recently seen some signs of returning activity, but gas consumption is still historically low as Europe’s economic recovery is expected to take time. Key consumers — from steel to chemicals manufacturers — are proving reluctant to run their businesses at full steam after a record surge in energy prices during the crisis prompted them to curb production.

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Gas demand in the European Union was 19% lower last year compared to an average level for 2019-2021, with consumption cuts split equally between the power sector, industry and households, according to the Bruegel think tank in Brussels. More recent data from Independent Commodity Intelligence Services point to an 11% rebound in January compared to the same month last year, but that’s still 14% below the five-year average for the period.

Demand is being weighed down by a number of factors, including an increase in renewables generation and a mostly mild winter. There’s also uncertainty around new global LNG capacity coming online only from 2025 and the expiration of the Russia and Ukraine transit agreement at the end of the year.

“It’s underwhelming how much prices have declined and demand hasn’t really come back,” Morgan Stanley’s Rats said. “But volatility is also very strong.”

The sustained demand shortfall is one of the main reasons European gas prices have extended recent declines. Dutch front-month futures traded 1.3% lower on Friday at €28.63 a megawatt-hour at 8:55 a.m. in Amsterdam. 

—With assistance from Andrew Reierson.

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