UK gas prices fall on low export demand, storage

Tue Nov 9, 2010 10:54am GMT

* Ample LNG, storage able to supply high heating demand

* Six LNG tankers scheduled for UK over coming weeks

LONDON, Nov 9 (Reuters) - British gas prices fell on Tuesday due to low export demand and ample liquefied natural gas (LNG) and storage, which helped bring prices down despite higher heating demand from cold weather.

Gas for December eased 0.20 pence at 45.70 pence per therm ($7.37 per mmbtu) at 1015 GMT while gas for delivery on Wednesday slipped 0.40 pence at 45.90 pence compared with day-ahead prices in the previous session.

Traders said the spread between prompt and front-month prices meant the market expected storage to withdrawal to satisfy demand, as well as LNG terminals having the option to turn up to add to supply.

"It's moved lower again from yesterday. We have high demand again today, but again weak European prices. We're quite easily able to cope. The prompt can only rally so much before storage will turn on," one gas trader said.

"We have a short system and prices tried to push up early on but have sold off now," another trader said.

Day-ahead prices traded as high as 46.50 pence earlier in the session before easing, according to one broker.   Continued...

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