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UK GAS-Gas prices plunge on rising supplies, fall in carbon

Reuters - UK Focus

* Supplies from Norway rise

* Gas system broadly balanced

* Warmer weather expected next week

* Carbon prices fall by 5 percent

April 28 (Reuters) - British gas prices plunged across the curve on Thursday, pressured by a warmer weather outlook, rising supplies from Norway and falling carbon.

Gas for immediate delivery fell 5 percent to 32.45 pence per therm by around 1130 GMT, while day-ahead prices lost 6.7 percent to 32.10 pence/therm.

Spot prices fell for the second session in a row after surging to their highest in nearly four months at 35 euros per megawatt-hour (MWh) on Tuesday.

The gas system was broadly balanced, with demand expected at 274 million cubic metres (mcm) per day, 40 percent above the seasonal norm, compared with a shortfall of 9 mcm earlier on Thursday, National Grid (LSE: NG.L - news) data showed.

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"The strong bearish driver is that the cold snap is ending and physical conditions should be significantly looser next week," said Oliver Sanderson, a gas market analyst at Thomson Reuters.

Britain's Met Office said temperatures are expected to rise from Sunday to near average next week, while wind speeds are also to increase, boosting output from wind power turbines.

Norwegian gas flows to Britain rose to 101 mcm/day from a rate of 88 mcm/day earlier on Thursday, data from Norway's gas system operator Gassco showed.

Meanwhile, supply from UK's liquefied natural gas (LNG) terminals remained high, at 50 mcm/day, and three new tankers were confirmed to arrive by May 4.

British gas prices further along the curve also took a dive as oil futures slid after setting a 2016 high the previous day.

Contract for gas delivery next quarter fell by 9.5 percent to 29.50 pence/therm, while next winter was down by 6.3 percent at 35.60 pence/therm.

The Dutch day-ahead gas price at the TTF hub fell 1 euro/MWh, or 6.9 percent, to 13.45 euros/MWh.

In the European carbon market, front-year allowances eased by 0.34 euros, or nearly 5 percent, to 6.50 euros a tonne, following German power prices and other energy contracts, traders said.

While oil prices fell as traders locked in profits, analysts said that supply disruptions and a weakening dollar could push prices higher soon. (Reporting by Nerijus Adomaitis in Oslo; Editing by David Goodman)