LONDON: British gas for immediate delivery fell on Friday morning due to an oversupplied transmission network and a forecast that mild weather would continue over the weekend.
The within-day gas contract fell 0.70 pence to 62.30 pence per therm, due to a market oversupplied by 5 million cubic metres/day (mcm) despite Norway diverting more gas to mainland Europe.
Flows through Norway's Vesterled pipeline to Britain dropped to 10 mcm this morning from 20 mcm on Thursday, reflecting increasing supply diversions to Europe as low consumption and higher domestic output cut demand for imported gas.
Gas for Monday delivery traded 0.55 pence higher at 63.20 pence after analysts at Point Carbon raised their estimate of heating demand by 15 mcm above initial forecasts for the day.
Increased heating demand will likely trigger withdrawals from storage facilities next week, Point Carbon said.
Britain's MetOffice expects weather conditions across the UK to become less mild between Sunday and Tuesday, although temperatures should remain above-average.
"The fundamentals look weak for now and the market is giving up some of the gains from yesterday, which look to have been overdone," a UK gas trader said.
UK day-ahead gas prices gained almost 1 percent on Thursday as more gas was added to storage sites and Norway diverted supplies to Europe.
Figures from National Grid showed that demand is expected to be 238.5 mcm on Friday, lagging average demand for the time of year by some 65 mcm.
Industrial demand remains subdued in Britain because many factories will not return to normal capacity until Jan. 7, the first full working week of the year, the trader said.
Deliveries of gas from the South Hook liquefied natural gas terminal in Wales remained low, but the Qatari vessel Murwab is expected to arrive in South Hook on Jan. 9, which should terminal output rise to clear space in storage.
Further along the curve, the summer 2013 contract was priced at 61.80 pence per therm, down 0.15 pence on Thursday's session.
In the power market, baseload electricity for 24-hour delivery on Monday traded at 47.30 pounds per megawatt hour.
Center>Copyright Reuters, 2013
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