European natural gas futures declined in after-hours trading on Monday as optimism around a potential US-Iran agreement eased concerns over prolonged liquefied natural gas supply disruptions through the Strait of Hormuz.
Front-month Dutch TTF contracts fell 6.65% to 45.445 euros ($52.93) per megawatt hour, while UK markets were closed on Monday due to the Spring Bank holiday.
Markets weakened after US President Donald Trump said negotiations with Iran were "proceeding nicely," adding that a deal would avoid a return to military escalation in the region.
European gas prices fell to their lowest level in two weeks as traders weighed signs of progress in US-Iran talks that could help restore energy flows through the Strait of Hormuz, according to Trading Economics.
US Secretary of State Marco Rubio said there was a "pretty solid" deal on the table and that Washington would give diplomacy "every chance to succeed" before considering alternatives, while speaking to reporters in New Delhi.
Despite slower inventory drawdowns due to warmer weather, EU gas storage remains low. Gas Infrastructure Europe reported inventories at 37.83%, down from 45.69% a year ago, with Germany at 29.33% and France at 38.58%.
Severe Weather Europe said an extraordinary late-May heatwave was pushing temperatures across Spain, Portugal, Ireland, the UK, France and Germany by 12-16 degrees Celsius above long-term averages, marking a potentially record-shattering event for the period.
Global gas markets remained mixed as Asian LNG prices strengthened on supply concerns tied to potential strikes at Australia's Ichthys LNG plant and outages at Malaysia's Bintulu LNG facility, ANZ Bank's Daniel Hynes said.
Japan Organization for Metals and Energy Security's weekly LNG price analysis for the week ending May 22 showed Northeast Asian spot LNG prices held in the high-$18 per metric million British thermal unit range, although expectations for progress in US-Iran talks later eased prices.
In European markets, prices rose last week due to a decrease in supply from an unplanned shutdown of the Asgard gas field in Norway and a surge in LNG prices in the Asian market, according to Jogmec.
Prices fell later in the week amid expectations that future supply and demand would ease, based on forecasts of rising temperatures in Europe and increased renewable energy generation, Jogmec said.
The Strait of Hormuz, which accounts for roughly one-fifth of global LNG flows, saw a slight uptick in tanker traffic, with 33 vessels transiting through the waterway over the past 24 hours, according to Hormuz Strait Monitor.
Exporters in Qatar and the UAE are working to deliver fuel to buyers despite the waterway being largely closed, with three LNG vessels from the Persian Gulf reportedly crossing the Strait in recent days, according to Trading Economics.