LONDON: Prompt natural gas prices in Britain fell on Monday morning as higher flows from the UK Continental Shelf (UKCS) and the Netherlands contributed to an oversupplied system.
Prices for within-day delivery were trading at 57.20 pence per therm at 0856 GMT, down 1.20 pence from their last settlement. Prices for delivery on Tuesday were down 0.55 pence at 57.35 pence per therm.
With supply flows at about 283 million cubic metres (mcm) on Monday and demand expected to be about 260.6 mcm, the system was 22.4 mcm oversupplied, National Grid data showed.
The oversupply was largely due to higher gas flows from the Netherlands and the UKCS.
Flows through the BBL pipeline, which transports gas from the Netherlands to Britain, were around 22 mcm/day on Monday morning, up from levels around 15 mcm over the weekend, National Grid data showed.
UKCS gas production was expected to hit 127 mcm on Monday, up sharply on the end of last week, analysts at Thomson Reuters Point Carbon said.
"These flows have been low so far this winter but had been forecast to rise this week and are having an impact in driving the system long," the analysts said in a daily research note on Monday.
Further along the curve, benchmark UK summer gas prices fell 0.90 pence to 52.50 pence per therm, dragged lower by weaker oil prices, traders said.
Forward gas contracts, due to a longstanding practice which fixes long-term gas prices to crude, are sensitive to swings in oil markets.
Front-month Brent crude prices fell more than $2 per barrel to a five-year low in Asian trade on Monday, extending a steep sell-off after OPEC decided not to cut production last week, keeping markets well supplied..
The weak oil prices also contributed to falls across Europe's energy complex.
British day ahead baseload power prices were down 1.90 pounds at 48.90 pounds/MWh.
The day-ahead TTF gas price was 0.4 euros lower at 23.85 euros per megawatt hour (MWh).
The benchmark European Union carbon price fell 0.08 euros to 6.96 euros a tonne on ICE Futures Europe.
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