LONDON: British prompt gas prices fell on Monday morning as warm weather and the Christmas holiday period weighed on demand and trade dropped off, amid an oversupplied transmission network.
The price of gas for delivery on Tuesday fell 0.65 pence to 63 pence on the back of lower expected demand on Christmas Day, when much of Britain's industrial sector should reduce energy use as plants shut.
Gas for weekend delivery fell 1.5 pence to 62.25 pence.
Britain's gas market was oversupplied by 24 million cubic metres/day (mcm), 9 percent of total demand for the day, data from National Grid shows.
"Demand is very low and prices across the board are softening given that temperatures are still very mild...most traders are expecting injections into storage sites at some point over the next few days," a gas trader from an investment bank said.
Liquidity was thin due to the Christmas holiday season as many traders were absent from the market, he added.
Norwegian imports increased to about 120 mcm and liquefied natural gas (LNG) terminals pumped out 35 mcm.
An LNG tanker from Qatar is due to berth at the South Hook terminal on Thursday, keeping pressure on prices.
Traders may decide to inject gas into depleted mid-range storage facilities this week, due to a glut of supply.
The Christmas holiday week, usually a low demand period due to reduced consumption from industry and business, faces further downside as unusually mild temperatures curb residential use.
Temperatures this week are forecast to decline slightly from 11 degrees Celsius on Monday to around 7 degrees C by the end of the week.
In its 6-15 day forecast, Britain's MetOffice said: "Temperatures should be near or just below average to the north, but mild at times further south."
Benchmark summer 2013 gas prices fell 0.40 pence to 61.45 pence, while the subsequent winter contract softened by 0.25 pence, to 69.90 pence.
Power prices in Britain fell along with gas prices with baseload day-ahead power dropping 3.50 pounds pence to 41.5 pounds per megawatt-hour (MWh).
Power supply margins remained healthy given an overall reduction in electricity demand across the UK.
Center>Copyright Reuters, 2012
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