April 2, 2014 / 8:31 AM / 4 years ago

UK GAS-Prices hit 2.5-year low as warm weather reduces demand

* Gas system oversupplied by 28.1 mcm

* Demand 25 pct below seasonal norm

LONDON, April 2 (Reuters) - British wholesale natural gas prices hit a near two-and-a-half-year low on Wednesday morning as warm weather reduced demand, leaving the system oversupplied.

Gas prices for next-day delivery traded at 48.6 pence ($80.85) per therm at 0752 GMT, down 1.75 pence on Tuesday’s close and their lowest level since October 2011.

Prices for delivery within the day were at 48.50 pence, down 2.25 pence a therm.

“There’s plenty of gas around at the moment to satisfy demand, and with the weather expected to stay warm for the next few days, I don’t see any let-up (for prices),” a gas trader said.

With supply flows at about 220.2 million cubic metres (mcm) per day and demand expected to be about 192.1 mcm, the system was 28.1 mcm oversupplied.

Wednesday’s demand was about 25 percent below the seasonal norm of 257.5 mcm, data from National Grid showed.

Meteorologists said they expected average temperatures in Britain to remain above the seasonal norm for the next few days.

“The warm episode is likely to last over the weekend into early next week with slowly more unsettled conditions especially in the west and north (of Europe),” meteorologists at Thomson Reuters Point Carbon said in a daily report.

Prices further out on the curve also fell, with the Winter 2014 contract down 0.95 pence to 60.65 pence a therm at 0752 GMT.

In Britain’s power markets, prices for baseload (24 hours) delivery fell 2.00 pounds per megawatt-hour (MWh) to 40.30 pounds a MWh on the back of weaker demand. ($1 = 0.6011 British Pounds) (Reporting by Susanna Twidale; editing by Jane Baird)

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