LONDON: British spot gas prices fell on Monday morning as the market opened oversupplied, but prices for delivery later in the week rose as colder weather is expected to move in from Wednesday.
Gas prices for within-day delivery were trading at 64 pence per therm at 1040 GMT on Monday, down 2.4 pence from the opening.
Traders said that the price drop reflected an oversupplied system.
"The system has opened well-supplied this morning due to milder temperatures and consequently lower consumption," one gas trader said.
Britain's gas demand was expected to be around 240 million cubic metres (mcm) on Tuesday, around 10 percent below the seasonal norm, and with flows seen to be around 265 mcm indicating the system would be 25 mcm oversupplied.
Prices for delivery later this week were up as colder weather is expected to move into Britain by Wednesday.
Britain's Met Office said that it expected temperatures to rise towards 15 degrees Celsius by Wednesday, but that colder weather would then move in with maximum temperatures not to rise much above 10 degrees for the rest of the week.
Balance of week gas prices were up 0.55 pence since opening to 66 pence a therm by 1040 GMT.
Further out on the curve, gas for delivery next summer was up 0.35 pence to 64 pence a therm, along with slightly firmer oil prices.
Brent futures edged up towards $106 a barrel in Asia on Monday after Iran and six world powers failed to reach a deal on Tehran's nuclear programme, while data showed a slight rise in implied fuel demand in China.
In Britain's power market, prices for baseload (24 hours) delivery the next day were down 2.15 pounds ($3.44) per megawatt hour (MWh) to 48.75 pounds per MWh as wind power generation was expected to increase by Tuesday.
Meteorologists said that Britain's wind power generation would rise from under 4,000 MWh per hour on Monday to almost 6,000 MWh an hour by Tuesday evening.
In the nuclear power generation sector, EDF Energy delayed the return to the grid of its Dungeness B21 unit to November 14 from November 11. ($1 = 0.6252 British pounds)
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