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UK GAS-Prices decline on improved supply, reduced demand outlook

LONDON, July 6 (Reuters) - British wholesale gas prices mostly declined on Wednesday due to expectations of improved supply and less demand from gas-fired power plants over the weekend and next week and amid a general slump in financial markets.

Gas for immediate delivery was down 0.15 pence at 34.15 pence per therm at 0914 GMT from the previous settlement, while gas for weekend delivery was down 0.55 pence at 33.45 pence per therm.

Traders said supply was expected to improve later this month after a period of both planned and unplanned outages.

Gas-fired power plant consumption is also forecast to be lower at the weekend and into next week due to stronger wind speeds, reducing gas plants' need to buy gas.

However, gas for day-ahead delivery inched up slightly. Gas for Thursday edged up by 0.05 pence to 34.15 pence per therm due to a slightly undersupplied system.

National Grid (LSE: NG.L - news) data showed demand was forecast at 194.6 mcm and flows at 190.2 mcm/day, leaving the system around 4 mcm short.

Contracts further out on the curve were also generally lower due to falls in the price of carbon permits and due to a slump in oil overnight.

However, greater falls were being stemmed by a plunge in the price of sterling to below $1.30, its weakest since 1985, as fears over instability in the European Union returned.

The euro was at a two and a half year high against the pound at around 85.00 pence. A weaker pound is usually bullish for UK gas prices.

For the UK gas market, Brexit and volatility in the price of the pound remains an important driver and a factor that should be closely watched, said Dimitrios Saratzis, gas analyst at Thomson Reuters (Dusseldorf: TOC.DU - news) .

In the Dutch gas market, the day-ahead gas contract at the TTF hub was down 0.22 euro at 13.93 euros per megawatt-hour.

In Europe's carbon market, the front-year EU allowance price fell by over 5 percent to 4.47 euros a tonne. (Reporting by Nina Chestney)