January 13, 2017 / 10:18 AM / 3 years ago

UK GAS-Prompt prices fall on oversupply, milder weather

* Gas system 23.7 mcm oversupplied

* Day-ahead price retreats from Thursday’s 21-month high

LONDON, Jan 13 (Reuters) - Prompt British gas prices fell on Friday morning, retreating from a 21-month high hit the previous day, as a bumper supply of gas led to an oversupplied system.

The day-ahead contract was down 1.4 pence to 54.30 pence/therm at 0953 GMT, retreating from a 21-month high hit the previous day.

The within-day contract fell 1.1 pence to 54 pence per therm.

Britain’s gas system was oversupplied by 23.7 million cubic metres (mcm) per day, with demand forecast at 341 mcm and supply at 364.7 mcm, National Grid data showed.

Traders said a cold weather snap had pushed prices up over the past few days, but that a forecast of milder weather had combined with the oversupply to lead to weaker prices on Friday.

Britain’s Met Office said temperatures were likely to rise over the weekend, with the south of the country possibly seeing a high of 8 degrees Celsius on Sunday, compared with below zero temperatures earlier this week.

Home heating accounts for 40 percent of Britain’s gas use, meaning temperatures can have a big impact gas demand.

Meanwhile strong imports of gas from Norway and continental Europe contributed to the over-supply in the market.

Imports from Norway through the Langeled pipeline were around full capacity near 75 mcm while imports from the Netherlands through the BBL pipeline were around 20 mcm.

Further out on the curve gas prices slipped, with the Summer 2017 contract down 0.4 pence to 46.30 p/therm.

In the Netherlands, the day-ahead gas price at the TTF hub fell 0.55 euro to 20.25 euros per MWh.

In the European carbon market, the benchmark Dec. 17 contract dipped 0.02 euro to 5.03 euros a tonne. (Reporting By Susanna Twidale; editing by Nina Chestney)

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