LONDON: Prompt natural gas prices in Britain eased slightly on Wednesday on expectations of improved supply as domestic flows resume after maintenance.
Gas prices for day-ahead delivery were trading at 49.70 pence per therm at 0823 GMT, down 0.05 pence since their last close. Prices for within-day delivery were also down 0.05 pence at 48.75 pence per therm.
Traders said they expected supply to improve as UK Continental Shelf flows start to resume after maintenance at some fields.
"Our outlook is for incremental increases in UKCS production and terminal receipts into October, especially in the week after next when consumption picks up as many contracts are likely to be structured by the buyers needs," said Oliver Sanderson, analyst at Thomson Reuters Point Carbon.
Point Carbon analysts expect supply to increase by 10 percent this winter, which will drag down prices in the fourth quarter.
Colder weather from December to February could lead to withdrawals of gas from storage, causing prices to peak in late January or early February, they said in their winter gas outlook report.
On Wednesday, however, Britain's gas system was undersupplied by 16 million cubic metres (mcm). Gas flows were expected to be 159.7 mcm while demand was forecast to be 175.7 mcm, National Grid's website showed.
To balance the shortfall, an increase in withdrawals from storage is likely.
Centrica said on Tuesday that its Rough gas storage facility, the biggest in Britain, is on track for a new record fill level ahead of the winter season.
"This is the result of a relatively mild 2013/14 winter resulting in high carry-over stock levels and excellent injection performance over the summer," Centrica said in a statement.
Rough is currently off line for maintenance and will be unavailable for injection or withdrawal from Sept. 25-28.
Further along the curve, gas prices for delivery next winter, which gas markets define as beginning from the start of October, were down 0.35 pence at 57.55 pence per therm.
The next round of talks between Ukraine, Russia and the European Commission over Kiev's dispute with Moscow over its gas bill will take place in Berlin on Friday.
Analysts at Societe Generale said if a gas supply disruption to Europe occurs this winter, the gas curve's risk premium will last longer than the disruption as the market will have to be convinced that any trilateral solution between the EU, Ukraine and Russia will last.
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