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UK GAS-Prices down on milder weather, higher wind output

Reuters - UK Focus

* System oversupplied by 20 mcm on Monday morning

* Demand forecast to be 40 mcm below seasonal norm

LONDON, Jan 25 (Reuters) - British wholesale gas prices as milder-than-average temperatures curbed demand for gas for heating and higher wind output was forecast to stem gas demand from power plants.

Gas for immediate delivery was 5.45 percent or 1.70 pence lower at 29.50 p/therm at 0900 GMT from the previous settlement. It (Other OTC: ITGL - news) last traded at these levels in 2010.

Gas for day-ahead delivery fell by 1.15 pence to 29.50 p/therm at 0835 GMT from the previous settlement

"Demand is well below what it should be in January - it's nearly 40 mcm below the season norm," a UK gas trader said.

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The system was oversupplied by 20.5 million cubic metres (mcm) of gas on Monday, with demand forecast at 248.2 mcm and flows at 268.7 mcm/day, National Grid (LSE: NG.L - news) data showed.

Seasonal normal demand is around 287 mcm.

The oversupply has been caused by low local demand zone (LDZ) consumption, which is forecast to be 161 mcm on Monday, down from 23 mcm on Friday, due to less demand for gas for heating due to milder temperatures.

Britain's National Transmission System delivers gas to 13 local distribution zones (LDZs) across the country, which transmit gas to end-users.

Temperatures are expected to fall by the weekend from current levels but will still be 2 or 3 degrees above normal for the time of year.

Demand for gas from power plants was also lower due to forecasts of higher wind speeds.

Wind power met around 13.5 percent of Britain's electricity demand on Monday morning, with natural gas contributing around 36 percent.

In continental Europe, Dutch day-ahead gas at the TTF hub was 0.65 euros lower at 12.85 euros per megawatt hour, while benchmark European carbon allowances fell by 0.39 euros or 6.13 percent to 5.97 euros a tonne. (Reporting by Nina Chestney; editing by Susan Thomas)