Prompt prices fell Tuesday morning on the UK NBP gas trading hub as a demand spike on what is forecast to be a brief cold snap was amply covered by strong imports and LNG send-out, while the weaker front and softening oil prices weighed on seasonal contracts.
The within-day contract was trading at 56.75 pence/therm midday GMT, down by 1.10 p/th from Monday's close while the day-ahead contract followed suit shedding 1.30 p/th at 56.90 p/th.
Forecast demand breached seasonal norms by 10 million cubic meters at 318 million cu m as temperatures sank below long-term averages -- by as much as 3 degrees Celsius in London -- after more than a week of mild weather.
The cooler weather, which increases gas-burn for domestic heating, is expected to be short-lived with CustomWeather forecasting warm weather beginning at the weekend.
Despite the higher demand, the system operated long throughout the morning.
"The system opened 17 million cu m long. The increased need for gas burn and elevated exports to the Continent of 21 million cu m have supported demand this morning. However, supply remains robust," an analyst said. "LNG send-out is still strong as South Hook is expecting a cargo today and imports remain elevated."
Another cargo is expected for March 13 at the South Hook terminal, according to local shipping information.
The front of the curve fell for the sixth day in a row.
"The front end just looks very comfortable," a trader said.
"The milder temperatures have allowed for storage injects and LNG stock to be conserved and with this cold not forecast to last we should see some lower demand," the trader said.
Gas for April and Q2 delivery lost about a pence in value each trading at 56.75 p/th and 56.40 p/th, respectively. Summer 12 was changing hands at 57.05 p/th, down by 0.80 p/th.
Later dated contracts were pulled down by the bearish front and weakened oil prices, sources said.
Winter 12 shed 0.90 p/th at 71.10 p/th and Summer 13 was trading at 62.15 p/th, down by 0.75 p/th.
Crude futures were near day lows in morning European trading, taking direction from financial considerations with regional equity markets notably lower and the dollar firming against the euro.
At 0950 GMT, April ICE Brent traded 73 cents lower at $123.07/b.
