March 1, 2012 / 11:16 AM / 6 years ago

UK gas slips on oversupply as LNG flows rise

* UK gas demand pegged 17 pct below seasonal norms

* Rough storage levels rise 3 pct in five days

* Units at RWE biomass plant to stay shut until end July

LONDON, March 1 (Reuters) - British prompt gas prices extended losses on Thursday morning, falling to a nine-day low as the UK gas market was oversupplied following a rise in gas flows from a liquefied natural gas (LNG) terminal.

Day-ahead gas prices fell 0.85 pence to 58.15 pence per therm, the lowest since Feb. 21, while within-day gas traded at 58.20 pence, down 0.80 pence on the previous session.

Britain’s gas market was nearly 16 million cubic metres oversupplied, putting pressure on prices already weak due to low demand.

“The step-up in South Hook flows in the context of fairly flat demand isn’t really helping the bullish case,” one UK gas market analyst at a utility said.

Supply from the South Hook LNG terminal rose by around 15 mcm/day overnight, while demand was pegged 17 percent below seasonal norms, National Grid data showed.

A rise in gas injections into the Rough storage site to around 17.7 mcm/d failed to provide any upside.

The storage facility, Britain’s largest has been replenishing stocks since the onset of the wild weather and levels have rise nearly 3 percent in five days.

With weather conditions expected to turn slightly colder next week, week-ahead gas traded at 59.00 pence, but 0.50 pence lower than in the previous session.

Curve contracts traded mildly lower, with the prompt steering losses, but the crude market providing some support.

Summer 2012 gas fell 0.15 pence to 58.60 pence per therm.

POWER

Day-ahead power prices slipped in line with weaker gas as it was cheaper to burn the fuel for power generation.

Prices defied bullish impact from lower wind power production and reduced imports from France due to the start of valve replacement work.

Baseload spot power prices fell one pound to 45.10 pounds per megawatt-hour (MWh), while week-ahead baseload shed also one pound to 45.25 pounds.

Wind power production was expected to be weak on Friday, with less than 1,000 MW produced per hour in the first half of the day, National Grid data showed.

The 2,000-MW France-UK power interconnector also started to halve power flows for engineering works which will last until June 25.

From May 21-29 the interconnector will fully shut down for the same valve replacement work.

Two units at RWE npower’s 750-MW Tilbury biomass plant, which caught fire on Monday, are not expected to restart before the end of July, the operator said. (Reporting by Karolin Schaps; editing by Jason Neely)

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