Prompt prices on the Continental European gas markets softened over Wednesday morning in a continuation of Tuesday afternoon's more bearish sentiment, traders said.
In addition, oil prices moved down in response to the strengthening dollar resulting in downward pressure on the forward curve.
"Contract prices have continued to soften which is unsurprising in light of very healthy storage levels across Europe and declining oil prices," a trader said.
Although the UK's NBP grid opened slightly short Wednesday, the system was more balanced than Tuesday morning and prices in the UK and Continental markets eased as a result.
The Dutch TTF contract shed 15 euro cent from Tuesday's close to change hands midday, London time, Wednesday at Eur23.15/MWh.
Both the German NetConnect and GASPOOL contracts traded midday at Eur23.20/MWh losing 20 euro cent each from the previous close.
However, the French PEG Nord day-ahead heard gains of 15 euro cent over the morning to fall in line with the TTF contract at Eur23.15/MWh.
Healthy storage levels have contributed to the bearish prompt, traders said. UK gas storage has reached above the 70% capacity mark, according to data from Gas Storage Europe, up 20 percentage points year-on-year.
Dutch gas storage was reported at 1.352 million cubic meters, or 65% of total storage capacity up from 41.95% at the same time last year.
Meanwhile, German storage reached 75.5% capacity at 15.2 million cu m, to represent considerably higher levels than June 2010's 61.73%.
Although gas flows from the Netherlands to the UK through the BBL pipeline appeared to fall to zero Wednesday morning, a spokesman for the BBL company told Platts that a technical issue resulted in problems with the flow graph but that flows continued as normal.
Flows were shown to be consistent at around 19 million cu m/d over Tuesday afternoon and early Wednesday morning, but then reduced to nothing over a period of three hours.
The TTF forward curve also heard losses over Wednesday morning following oil prices down.
The firming dollar caused Brent crude prices to drop Wednesday morning weighing on forward curve contracts as a result.
July ICE Brent began the day 64 cents lower at around $119.50/barrel before falling further to around $119/b by midday.
The TTF Summer 12 contract lost 15 euro cent from Tuesday's close to change hands midday at Eur26.80/MWh, while the Cal 12 contract was heard 20 euro at Eur27.55/MWh at lunchtime.
