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UK GAS-Prices ease on mild weather, despite lower Norwegian flows
April 1, 2014 / 9:38 AM / 4 years ago

UK GAS-Prices ease on mild weather, despite lower Norwegian flows

* Mild weather expected for most of April

* Producers adjust supplies to lower spring demand

* Russia-Ukraine crisis seen to have little impact on EU markets

* Power markets rise on 2 nuclear reactor outages

LONDON, April 1 (Reuters) - British wholesale natural gas prices dropped on Tuesday morning despite reduced flows from Norway as mild springtime weather sapped demand.

Gas prices for delivery the next day were trading at 51.15 pence per therm at 1020 BST (0920 GMT) on Tuesday, down 0.15 pence since the opening. Prices for delivery within the day were at 51.50 pence, down 2.25 pence a therm.

Traders said the price drops were a result of mild weather, which outweighed a reduction in flows from Norway. April marked the official end of the high-demand winter heating season, resulting in adjustments of supplies by major gas producers.

Meteorologists said they expected average temperatures in Britain to remain above the seasonal norm until at least the middle of April, resulting in weak energy demand.

“For the coming week, most of western Europe is expected to have significantly warmer weather than the seasonal norms - 31 percent fewer HDDs (heating demand days) than the five-year norm. With no weather support and geopolitical risk (Ukraine crisis) seemingly already faded out of the market, prices could very well weaken,” Energy Aspects said in a research note on Tuesday.

Regarding political risks to western Europe’s gas supplies, Russia’s Gazprom announced on Tuesday a more than 40 percent increase in the price Ukraine must pay for gas, stepping up economic pressure on Kiev in its political standoff with Moscow.

The head of trading at Italy’s ENI said that he saw a high risk of gas disruptions because of the Ukraine crisis.

Most analysts said that even if Russia cut its gas supplies this spring, western Europe would be little affected despite Ukraine’s important role as a transit route, and that should exports to the European Union be affected, it would also be well prepared after a mild winter has left gas inventories well filled.

“Any supply disruption (to the EU) would likely be brief and limited,” Eurasia Group said on Monday.

In Britain’s power markets, prices for baseload (24 hours) delivery rose 0.3 pounds ($0.50) per megawatt-hour (MWh) to 42.30 pounds a MWh as nuclear power outages, one planned and one unplanned, took over 1,000 megawatts (MW) of capacity out of the market between Monday and Tuesday.

EDF Energy’s 550 MW Dungeness B-22 went off the grid for planned maintenance on Monday afternoon, while the company’s 500 MW Hunterston B-7 unit shut down in an unplanned outage on Monday evening.

$1 = 0.5998 British Pounds Reporting by Henning Gloystein; editing by Jane Baird

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