British prompt gas prices rebounded slightly on Wednesday due to a relief rally after prices slumped to a three-week low on Tuesday and supply fell short of demand.
Within-day gas prices rose 0.60 pence at 52.60 pence per therm after touching a 2012 low of 51.80 pence on Tuesday afternoon, with day-ahead gas trading at the same level.
A drop in terminal send-out and a slower pace of storage withdrawals made the system slightly undersupplied, data from National Grid showed.
The network manager forecast gas demand at 335 million cubic meters/day, which is pegged about 4 percent below the seasonal average as mild temperatures prompt households to turn down thermostats.
Gas-fired heating is the main driver of UK winter demand.
LNG throughput is low but that's not surprising given the shape of the forward curve and low prices, a trader from a major UK utility said.
Month-ahead gained 0.55 pence at 52.6 pence in line with other prompt contracts, while the benchmark summer 2012 gas contract rose slightly to 51.65 pence.
Overall gas market sentiment remains bearish despite the slight uptick in prices. The UK currently has 81 percent higher stocks in storage than this time last year, while ample Norwegian imports and domestic production has subdued pricing volatility.
Exports to Europe rose to 15 million cubic meters.
The UK Met Office forecast that temperatures in January will likely remain around seasonal average levels with the potential for some milder weather scattered over the next two weeks.
However there is also a significant risk of much colder weather becoming established right across the UK, with snow in places and widespread overnight frosts, it said.
DEMAND AND SUPPLY
The system was about 4 million cu m/d undersupplied on the back of sharp cuts in storage withdrawals and lower send-outs from liquefied natural gas (LNG) terminals.
In the power market, spot prices were down, with the day-ahead baseload contract slipping 30 pence to 40.20 pounds a MWh.
(Reporting by Oleg Vukmanovic)