LONDON: Prompt natural gas prices in Britain edged lower on Monday morning as robust supply led to a largely balanced system and as fears subsided of disruptions in Russian gas supplies to Europe.
Gas prices for within-day delivery were trading at 37.45 pence ($0.64) per therm at 0903 GMT, down 0.65 pence on Friday's close. Prices for Tuesday delivery were down 0.25 pence at 37.50 pence per therm.
With supply flows at about 169.5 million cubic metres (mcm) per day on Monday and demand expected to be about 171 mcm, the system was fairly well balanced, National Grid data showed.
Day-ahead prices soared almost 5 percent just before the close on Thursday due to fears of a sharp deterioration of relations with major energy producer Russia after a Malaysian Airlines passenger jet crashed over eastern Ukraine.
But traders said the risk premium relating to a potential disruption had subsided since Thursday.
Europe obtains around a third of its gas through imports from Russia, and almost half of this usually flows through Ukraine.
Prices on the curve remained under pressure due to high storage levels. Britain's gas storage sites are 88 percent full, according to Gas Infrastructure Europe data.
British gas prices for Winter 2014 delivery fell 1.15 pence to 57.95 pence per therm.
In Britain's power market, prices for day-ahead baseload (24 hours) delivery edged 0.36 pence higher to 36.00 pounds per megawatt hour.
Just one nuclear reactor is currently offline in Britain, EDF's 610 megawatt Heysham 1-1 unit.
EUROPEAN DEMAND
Analysts at Societe Generale said in a research note on Monday that European gas demand could rise as cheaper gas prices make gas-fired power generation more profitable than coal.
"With prices continuing their downward trend, we expect this change in the merit order in favour of gas to continue over the summer," the analysts said.
However, an 18.1 percent fall in European gas demand so far this year has led them to revise their full-year gas demand estimate to 8.5 percent lower than 2013 levels, compared with a previous forecast of a 5 percent dip.
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