Prices fell Wednesday morning on the UK NBP gas trading hub despite cooler temperatures and a short system as bearish sentiment due to Qatargas completing LNG export related maintenance and a weakening oil market outweighed short term supply/demand fundamentals, a trader said.
"The curve is coming off -- the rally at the end of last week was not sustainable," the trader said. "Qatargas ending its maintenance period, too, is having an impact".
"There is a bit of a cold snap, but it is expected to be mild again in the coming weeks and there is still plenty of gas around," the trader added.
Within-day gas, at 57.90 pence/therm midday Wednesday, was down by 0.85 p/th from Tuesday's close and day-ahead shed 1.15 p/th, at 57.90 p/th.
The temperature in London Wednesday morning fell 1 degree Celsius below normal and forecast gas demand -- in what has become a rare occurrence this winter -- breached seasonal norms. National Grid forecast Wednesday gas demand at 340 million cubic meters, about 13 million cu m above averages.
On Thursday, the temperature in London is forecast to return to seasonal norms, CustomWeather said.
The system was operating short by about 16 million cu m as "storage withdrawals from Rough had halted this morning, and LNG flows from Isle of Grain were still subdued," an analyst said.
Concerns of a shortfall in LNG deliveries was buoying front curve contracts in the past week, but fears were mollified Wednesday morning on news of the end to the Qatargas maintenance period.
Both the front month and quarter lost 1.15 p/th in value from Tuesday's close, trading midday Wednesday at around 57.80 p/th each.
Summer 12 was trading at 57.00 p/th, down by 0.90 p/th, and Winter 12 followed suit, losing 0.85 p/th at 69.00 p/th.
After a rally Tuesday which took Brent crude prices above $110/barrel, it was trading as low as $108/barrel around noon Wednesday.
Gas for Summer 13 delivery lost almost one pence, changing hands at 61.15 p/th.
