The German posted the second fastest time of the week of 1min 23.110 on supersoft tyres, just three tenths of a second down on Sebastian Vettel's best effort in the Ferrari on the even faster ultrasoft tyres on Tuesday.
“We tried quite a lot of things today and, although we need to do some more fine-tuning, it does feel like we are moving in the right direction,” said Hulkenberg.
“Melbourne is not far away, but it feels like we are on schedule and days like this are very encouraging.”
Romain Grosjean was second fastest for F1 newcomers Haas, whilst Kimi Raikkonen recovered from a frustrating morning for Ferrari due to a fuel system problem to record the third best time.
Indeed the action on the track was overshadowed by the news of a planned drastic overhaul to qualifying for Grands Prix for the upcoming season.
A knockout format for qualifying has been proposed by F1 bosses to introduce more excitement after two years of dominance at the front of the grid by Mercedes.
MERCEDES PRIORITISED MILES
The German giants once again prioritised miles over speed on day three as Nico Rosberg and Lewis Hamilton logged a combined 162 laps after a change of plan saw them split driving duties for the day.
Both again refused to show the true speed of the W07 with Rosberg fifth fastest and Hamilton down in eighth.
Hamilton didn't look too perturbed, though, as he passed through the paddock on a hoverboard whilst taking his dog Roscoe for a walk early in the session.
“I'm just waiting for the day that we get to do some supersoft tyres, those are the days that make testing exciting when you can test the car's limits,” said Hamilton.
Mercedes have now completed a remarkable 490 laps through the first three days of testing.
“We need to push the car to its limit in order to find little problems. At some point something will break and for now we need to keep on going to find out where the little weak points are,” said Rosberg.
“Laptime-wise, it's not realistic where we are. We haven't showed our cards, we're holding back, but the car is quick.”
McLaren-Honda's positivity over the reliability of their MP4-31 dissipated slightly as Jenson Button managed just 51 laps before his day was ended early by a hydraulic problem.
The 2009 world champion was also well down on pace as he finished 11th out of 12 drivers that took to the track.
Indonesian rookie Rio Haryanto had an opening F1 morning to forget as he spun his Manor into the gravel and finished nearly three seconds behind Button.
Original source: Hulkenberg tops third F1 test