LONDON: Wholesale natural gas prices in Britain were lower on Wednesday as supply continued to exceed demand.
The front-month futures lost 0.4 percent to 37.20 pence/therm in early trade, while the day-ahead contract had not traded at the time of writing but was bid at 36.85 pence, 0.15 pence below Tuesday's settlement.
"A long system and higher forecasted UKCS (UK Continental Shelf) flows for today are the two bearish factors for the day-ahead contract," analysts at Thomson Reuters Point Carbon said in a morning note.
The British gas system was estimated to be oversupplied by around 10 million cubic metres (mcm) on Wednesday, according to the National Grid, with demand for the day forecast at 168.8 mcm.
The system has been oversupplied for most of the year so far due to mild weather, regular imports and ample inventories.
UKCS flows were at 123 mcm/day early on Wednesday, 5-6 mcm higher than what was nominated for the day.
However, planned maintenance during the first two weeks of August is expected to hit UKCS production, leading to higher injections of gas into storage in the run-up to that.
The analysts added that sanctions expected to be imposed on Russia in the coming days over the Ukraine crisis could be bullish for the prompt contract.
The European Union has threatened Russia with harsher restrictions that could inflict wider damage on its economy following the downing of a Malaysian airliner.
Britain's gas supply will also be bolstered further this week after liquefied natural gas tanker Al Gattara docked at South Hook early on Wednesday.
Average temperatures were forecast to be around 3.5 degrees Celsius above the season norm on Wednesday, as a heat wave sweeping the country was expected to continue until at least July 27.
Meanwhile, day-ahead British baseload power was up 1 percent to 35.85 pence/megawatt-hour.
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