UK GAS-Prices fall on oversupply, milder forecasts

British wholesale gas prices fell on Monday in an oversupplied market and with forecasts showing a gradual return to normal seasonal temperatures after the current cold snap.

The within-day contract was down 2.00 pence at 40.75 pence per therm by 0915 GMT.

The day-ahead contract was down 1.60 pence at 41.00 p/therm.

"Our view on NBP (National Balancing Point) for today is bearish," analysts at Refinitiv said in their morning comment.

The British system was oversupplied with sendout of liquefied natural gas (LNG) up 21 million cubic metres (mcm) per day and production on the UK continental shelf 6 mcm/day higher, Refinitiv data showed.

National Grid data forecast British gas system supply at 360.3 mcm/day and demand at 351.2 mcm/day.

Local distribution zone (LDZ) demand, which mostly mirrors demand for heating, was forecast 7 mcm/day down for the day-ahead as temperatures were expected to move gradually up to normal this week, Refinitiv's analysts said.

More wind also cut Tuesday's gas for power demand by 12 mcm/day, they added.

Average wind output would rise from 2.2 gigawatt on Monday to 3.4 GW on Tuesday, while average temperatures in Britain were forecast at 2.6 degrees Celsius on Tuesday, rising to 5.3C by the weekend, Refinitiv Eikon data showed.

The weekend contract was down 2.00 pence at 40.50 p/therm.

By next week temperatures may reach double-digits again and there would be more wind, said a trader.

The January gas price at the Dutch TTF hub fell 0.57 euros to 14.00 per megawatt hour.

The benchmark Dec-20 EU carbon contract was down 0.35 euro at 29.76 euros per tonne, after closing at its highest point since Sept. 14 on Friday.