Prices dip on strong supply, warmer temperatures

LONDON, April 27 (Reuters) - British and Dutch wholesale gas prices edged lower on Thursday morning due to strong supply and weaker demand as temperatures are set to rise.

The British day-ahead gas price fell by 2.40 pence to 89.50 pence per therm by 0840 GMT, Refinitiv Eikon data showed.

The equivalent Dutch day-ahead price was down 0.40 euro at 38.60 euros per megawatt hour (MWh).

“The weekend will be sunnier and drier, with near or even slightly above normal temperatures,” Refinitiv meteorologist Georg Muller said on Thursday in a forecast for central Europe and the UK.

Average temperatures in Britain are expected at 11.8 degrees Celsius on Friday, up from 8.7C on Thursday, Refinitiv Eikon data showed.

The warmer weather translated to a drop in local distribution zone demand (LDZ) for gas which is primarily used for heating.

British LDZ demand was forecast at 104 million cubic metres (mcm) for Friday, down 18 mcm on the previous forecast.

Britain’s gas system was slightly over-supplied on Thursday, with demand supply forecast at 260.2 mcm and demand at 255.8 mcm, National Gas company data showed.

The British front-month contract fell by 0.90 p to 89.90 p/therm. The front-month Dutch contract edged down by 0.24 euros to 38.36 euros/MWh.

Traders said strong flows of gas from Norway and a continuation of Russian gas supplies via Ukraine, combined with healthy storage levels, had continued to pressure prices.

Russia's Gazprom said it will ship 41.7 mcm of gas to Europe via Ukraine on Thursday.

Europe’s gas storage sites are 58.3% full, the latest data from Gas Infrastructure Europe showed.

In the European carbon market, the benchmark contract rose by 1.40 euros to 87.04 euros a tonne.