LONDON (Reuters) - British spot gas prices rose slightly on Wednesday morning as cold weather and low storage kept the system tight although supply from liquefied natural gas (LNG) helped meet high demand.
Gas prices for delivery within the day were trading at 79.05 pence per therm at 0940 GMT, up two pence from the previous morning, and prices for delivery the next day were up 1.25 pence since Tuesday at 79.25 pence a therm.
The slight rise followed a sharp drop on Tuesday, and analysts said the uptick was the result of rising demand and lower supplies from Norway and continental Europe.
"The day-ahead contract is bullish due to higher forecast consumption and a drop in supply today," analysts at Thomson Reuters Point Carbon said.
"Current flows and nominations indicate lower imports from Norway and the continent for today," they said.
Britain's gas demand was expected to be 311.8 million cubic metres (mcm) on Wednesday, 17.6 percent above the seasonal norm, according to National Grid, though with supplies seen at 320.2 mcm, the system was seen 8.4 mcm oversupplied.
Traders said high supply was mainly a result of a number of tankers that delivered LNG to Britain in recent days.
Around 616,000 cubic metres of gas were delivered to Britain from LNG cargoes between March 25 and 31, and another 261,000-cubic-metre delivery was expected to arrive on April 10.
With fewer LNG tankers scheduled to arrive in Britain in the next week and the weather expected to remain cold, the UK's storage sites could come under pressure again.
Britain's gas storage sites remain very low, currently standing around 6.37 percent, according to Gas Infrastructure Europe.
Since the beginning of March, they have dropped from 21.49 percent, at an average daily depletion rate of 0.45 percent.
Despite this drop, the LNG arrivals have given the system some pause, and stocks are up from a record low of 5.13 percent at the end of March.
Britain's MetOffice has forecast that temperatures will remain below 10 degrees Celsius for the rest of the week, but that conditions would become slightly milder by the weekend.
Further out on the price curve, front-season delivery prices jumped from around 70 pence a therm last week to just under 74 pence this week as contracts rolled from the low demand summer to the high demand winter season.
Reporting by Henning Gloystein; editing by Jason Neely