March 15, 2013 / 11:32 AM / 4 years ago

UK weather trumps supply issues as gas prices fall

2 Min Read

* Gas imports decline across the board

* Falling prices erode premiums to Europe

LONDON, March 15 (Reuters) - British prompt gas prices extended losses on Friday morning as declining demand and rising temperatures outweighed the impact of fresh production outages in key supplier Norway.

Gas for immediate delivery fell 3.10 pence to 74.90 pence per therm thanks to an oversupplied delivery network as forecasters predicted warmer weather next week.

Gas for Monday delivery fell 3.55 pence to 73.75 pence.

Imports from Norway, Belgium and the Netherlands all fell as power failures and technical works slashed output from two major gas platforms on the Norwegian Continental Shelf.

Falling prices at the UK gas hub also discouraged flows from mainland Europe.

"A drop in heating demand today is causing the long system (oversupply)," analysts at Thomson Reuters Point Carbon said.

The market was oversupplied by around 7 million cubic metres/day (mcm) and demand was pegged at above-average levels of 300 mcm, lower than earlier in the week.

Flows from Norway fell to 50 mcm from 58 mcm in the previous session and 70 mcm on Wednesday.

"It's all a weather play at the moment, there's a bit of Norwegian maintenance over the weekend but ultimately it's getting warmer and people are focusing on that, as ever," a trader from a continental utility said.

The month-ahead gas contract fell half a penny to 67.80 pence.

The benchmark summer 2013 gas contract fell 0.40 pence to 65.40 pence.

Baseload power for 24-hour delivery on Monday traded at 54.75 pounds per megawatt hour. (Reporting by Oleg Vukmanovic; editing by xx)

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