LONDON: British gas prices eased on Wednesday, with the market oversupplied and the system coping better than expected in the face of higher demand as colder weather spurred consumption.
The day-ahead gas contract shed 0.80 pence to 66.50 pence per therm, while gas for immediate delivery edged 0.65 pence lower to 66.65 pence.
The UK gas market was more than 15 million cubic metres per day (mcm/d) oversupplied as Britain's largest storage site at Rough flowed at 20 mcm/d overnight. Supply from Norway held steady despite an announced 50 mcm/d loss in production.
Weather conditions remained colder, with temperatures slipping below seasonal norms and driving up the need for gas in heating systems.
"The weather forecast is a bit colder, it got everybody excited. But I think people pushed it too much yesterday," a UK gas trader said, noting traders were selling excess gas they had bought on Tuesday when temperatures dropped.
Imports from Norway via the Langeled pipeline were strong at around 70 mcm/d, National Grid data showed, indicating an announced reduction in Norwegian gas output had not affected exports to Britain.
A maintenance outage was expected to cut around 50 mcm/d of Norwegian gas production on Wednesday until Thursday morning, data provided by grid operator Gassco showed.
Britain's storage sites were adding around 10 mcm/d to the market, but analysts at Thomson Reuters Point Carbon expected the facilities to start injecting gas into storage tanks at a rate of around 5 mcm/d due to the oversupplied system.
Further out, volumes were thin as traders focused on changes in the short-term market.
The first quarter of 2014 traded down mildly on losses on the prompt, shedding 0.05 pence at 71.15 pence.
British power prices lost value in line with the gas market, factoring in also the expected restart of a nuclear reactor on Wednesday.
The day-ahead baseload power price fell 1.10 pounds to 50.75 pounds per megawatt-hour.
EDF Energy's 550-megawatt Dungeness B22 nuclear reactor was expected to reconnect to the grid at midday, further easing the supply picture.
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