European natural gas prices have traded within a narrow band over the past week as traders assess the next steps in diplomatic talks between the United States and Iran, with both sides seeking to end their conflict and restore energy shipments through the Strait of Hormuz.

Benchmark futures declined on Tuesday after posting gains in the previous session. Trading has been volatile; since early last week, prices have moved between 70 and 75 euros per megawatt-hour, with the market waiting for greater clarity on liquefied natural gas flows through the Strait of Hormuz.

After U.S. President Donald Trump rejected a proposal to fully restore shipping through the waterway within seven days, Iranian officials said privately that reaching a deal to end the conflict with the United States and reopen the strait before the U.S. midterm elections in November would be difficult. Washington has told mediators that Iran must make a clear commitment to reopening the waterway and make concessions on its nuclear program.

Meanwhile, with the heating season set to begin in a matter of days, concerns about Europe's natural gas inventories persist. Storage facilities across Europe are about 71% full, compared with a seasonal norm of 87%.

As the month-end approaches, trading volumes have declined, and many traders are rolling over positions built during the rally earlier this month to manage risk. Oxford Economics expects European natural gas to average 85 euros per megawatt-hour this winter, 140% higher than a year earlier. In a research note this week, the firm said it does not expect any substantial improvement in energy flows through the Strait of Hormuz this year, noting that key energy infrastructure in the region remains damaged.