UK spot gas and power prices eased on Friday morning as mild weather continued to keep a lid on gas consumption, but slightly colder weather expected in the coming days could mean that heating demand may rise in the near term.
Gas for within-day delivery traded at 59 pence per therm at 0930 GMT, down half a pence since Thursday afternoon, and day-ahead gas was also at 59 pence, down 0.1 pence a therm.
Power prices for next day baseload (24 hours) delivery were down 80 pence per megawatt-hour (MWh) to 42.75 pounds a MWh.
Traders said the drop in prices was a result of low heating demand.
Friday's demand was expected to be 266.8 million cubic metres (mcm), 20 percent below the seasonal norm of 320.1 mcm, according to National Grid data.
But despite the low demand, the system was expected to be 3.3 mcm short around 263.5 mcm, implying further storage withdrawals.
Gas storage sites across the UK were filled by an average of 43.2 percent on Thursday, according to Gas Infrastructure Europe, around 3.5 percent below the European average and down from around 75 percent in January.
A slight dip in temperatures in the coming days means that analysts expected gas consumption to rise in the near term, and Point Carbon said it expected day-ahead gas prices to be around 59.50 to 60.4 pence per therm.
The UK's Met Office said it expected temperatures across the Britain to drop slightly in the coming days.
Much of England is seeing temperatures above 10 degrees Celsius during daytime, but by Sunday these are expected to dip below 10 degrees.
However, Point Carbon meteorologists said that this would still be slightly above the seasonal norm.
Further out on the curve, prices also dropped.
After rising above 60 pence per therm - its highest since mid-November - on Thursday, the UK's NBP summer 2012 gas contract on Friday morning dipped and was testing support around 59 pence.
This meant that the spot within-day and day-ahead gas contracts were at the same value as the UK's benchmark forward contract.
The product seemed to find support around its 200 exponential daily moving average (DMA) value just above 59 pence a therm, but did retreat below its 50 percent Fibonacci retracement value around 59.76 pence.
The downward correction did not come as a full surprise since the contract's relative strength index (RSI) almost hit 70 points the previous day, implying an overbought market.
(Reporting by Henning Gloystein)