Gas prices fall as worries fade on cold snap

Gas for Wednesday stood at 27.60 pence per therm by 9:30 a.m., down 1.50 pence from day ahead contracts. December shed 1.00 pence at 31.50 pence, while January fell 1.10 pence to 35.00 pence.

"There's plenty of gas around," said a trader. "Unless we get a cold winter like last year...or there are some physical problems, we need to drop a bit."

The National Grid website showed the system was long early on Tuesday despite higher heating demand, helped by solid supply from Norway via the Langeled pipeline, Barrow and LNG terminals.

The Rough storage facilities were off after adding some supply in the afternoon on Monday.

Temperatures in northern Europe, including Britain, were expected to stay below normal levels over the next few days, pushing up energy demand for heating.

However, many LNG tankers were heading for Britain, where natural gas prices were higher than those in the United States.

Along the curve, prices were off as well, with the 2010 first quarter falling 1 pence to 35 pence. Summer 2010 slipped 0.75 pence to 33.50 pence and the 2010 winter shed 0.85 pence to 49.20 pence.

Asked about a possible disruption of Russian supply via Ukraine, the trader said: "It's all a massive yawn at the moment. There's plenty of gas around...It's something you need to be careful of, but no more than that."

In the power market, prices were soft in line with gas prices, returns of some plants and limited increases in demand despite colder weather.

"There's no big issue," said a trader. "There's been a cold snap. But we dealt with it well. Peak demand yesterday was not quite as high."

Baseload electricity for Wednesday stood at 36 pounds per megawatt hour, unchanged from day ahead contracts late on Monday. December stood at 36.50 pounds, vs 37.10 pounds, while January fetched 38.75 pounds, down from 39 pounds.

(Reporting by Nao Nakanishi; Editing by Veronica Brown)