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UK GAS-Prices down on strong Norwegian flows, milder weather outlook


March 18 (Reuters) - British wholesale gas prices declined on Friday morning on strong flows from Norway, expected milder weather into Easter and some traders taking profit from the previous session's gains.

Gas for immediate delivery was down by 0.15 pence at 30 pence per therm at 0915 GMT, while the day-ahead contract slipped by 0.3 pence at 29.70 pence/therm.

"The move upwards yesterday was fairly steep considering the underlying fundamentals. The pound has also continued to appreciate against the euro, which should dampen interest in UK gas," said Nick Campbell, risk manager at energy advisory service Inspired Energy (LSE: INSE.L - news) .

"Langeled (pipeline) flows are at technical capacity, South Hook is up and BBL is also strong, so perhaps traders are seeing less supply risk as we progress through the month."

The UK gas system was actually undersupplied by about 16 million cubic metres (mcm) of gas, with demand forecast to be around 288 mcm and supply at about 272 mcm/day.

This was mainly because of a reduction in flows from the UK Continental Shelf after an outage at ConocoPhillips (NYSE: COP - news) ' Britannia gas field, which is due to end on March 22. Flows into Bacton Shell (LSE: RDSB.L - news) have also been reduced but the cause is not yet known.

However, Norwegian supply is high and flows through the Langeled pipeline are strong at 72 mcm, with flows from the Netherlands via the BBL pipeline also stable.

The weather is forecast to be slightly unsettled over the next week but milder temperatures are expected by Easter, which should reduce heating demand.

Further along the curve, gas for summer delivery edged down by 0.05 pence to 27.50 pence/therm.

U.S (Other OTC: UBGXF - news) . crude touched new highs for this year on Friday at more than $40 a barrel on growing optimism that major producers would strike a deal to freeze output.

In the Dutch gas market, the day-ahead price at the TTF hub was down 0.11 euros at 12.27 euros/megawatt hour.

In the European carbon market, front-year EU allowances eased by 0.06 euros to 4.95 euros a tonne. (Reporting by Nerijus Adamaitis; Editing by David Goodman)

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