European natural gas prices declined alongside crude oil, fueled by market expectations that the Strait of Hormuz may resume normal traffic, potentially boosting global energy supplies after Washington signaled progress in diplomatic negotiations with Tehran.

The benchmark European gas futures dropped as much as 3.7% on Wednesday, hovering near a three-week low. Despite this, price volatility remains acute, as the region's gas storage refill season approaches its end with inventory levels significantly below typical thresholds.

Before this latest diplomatic push, US President Donald Trump stated that American officials held a "very good" meeting with Iranian representatives in New York, raising hopes for a negotiated resolution. Trump described the three-hour talks, held on the sidelines of the UN General Assembly, as "highly productive," with both sides planning another meeting in the near future. Iran has yet to comment on the session or disclose the identities of its participants.

Where opportunities lie

A restoration of Middle East energy flows would be a boon for Europe. Otherwise, the region faces an intense scramble for liquefied natural gas cargoes ahead of winter, which would push prices even higher. Currently, European gas storage facilities are only a little over 70% full, well below the seasonal average of 86%.

At 8:38 a.m. Amsterdam time, the Dutch front-month gas futures, the European benchmark, were down 1% at €72.59 per megawatt-hour.