Tuesday 03 January 2017 5:33 pm

Gas prices on the industry-focused prompt market slide on first full day of trading

Gas prices plunged in the first full day of trading in 2017, as weak demand and ramped-up North Sea supply wiped out many of the gains made in December.

Prices for one contract on the short-term market, also known as the prompt market, fell by 3.15p or six per cent to 49.75p per therm. Some of the largest and most intensive industrial energy users, such as chemicals, steel and paper manufacturers, buy their gas and energy supplies from the day and month-ahead markets.

Gas for instant delivery also fell by more than three per cent today.

Britain's total gas market was oversupplied by 31.4m cubic metres per day, as North Sea output recovered from a spate of short outages last month.

Several related markets, such as coal and carbon, were also tracking lower.

"Production levels held up well in the North Sea and to date demand for gas over the winter has been less than it might have been, with the weather not as cold and increases in wind power," said Jeremy Nicholson, director of the Energy Intensive Users Group.

"Fingers crossed supply should be relatively healthy and demand not too high over the next couple of months. For industrial users who purchase some of their gas and electricity on these floating rates, at the beginning of this year they might find that they're paying slightly less than was feared."

As other commodities markets turned bearish, oil fared better with prices reaching 18-month highs as production cuts from the 13-member Organisation of the Petroleum Exporting Countries (Opec) came into effect.

Although it has now pared back earlier gains (now standing at around $56 a barrel), the price of Brent crude was above $58 a barrel for much of the day