LONDON: British wholesale natural gas prices fell on Thursday morning after a warm weather forecast for the rest of June prompted a drop in demand that left the market oversupplied.
Britain's Met Office forecast temperatures will be warm this week and reach a high of 23 degrees Celsius in the South of Britain on Sunday.
Temperatures traditionally average around 16 degrees in June in the country.
Gas prices for delivery the next day were trading at 39.30 pence ($66.56) per therm at 0811 GMT on Thursday, down 0.6 pence on Wednesday's close. Prices for within day delivery were down 0.50 pence at 39.25 pence per therm.
"The system opened up long, weather forecasts went milder and there is still no sign of impact on transit gas to Europe (from the Ukraine crisis)," a trader said.
With supply flows at about 191.8 million cubic metres (mcm) per day on Thursday and demand expected to be about 172.7 mcm, the system was 19.1 mcm oversupplied, National Grid data showed.
Thursday's demand was around 8 percent below the seasonal norm of 187.1 mcm, National Grid data showed.
Prompt prices rose over 5 percent on Monday, hitting a high of 44.50 pence per therm as Russia cut supplies to Ukraine - an important transit route for its gas exports to the European Unioni - over a gas pricing and debt dispute.
But so far European supplies from Russia have remained steady, cutting the risk premium in gas prices, traders said and Slovak pipeline operator Eustream said natural gas flows heading to the European Union from Ukraine through Slovakia were running normally on Thursday morning.
Prices along the curve also fell. British gas prices for delivery next winter were trading at 59.90 pence per therm, down 0.50 pence on Wednesday's close.
In Britain's power market, prices for day-ahead baseload (24 hours) delivery also declined, with the contract trading 1.40 pounds lower at 35.60 pounds per megawatt hour.
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