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UK GAS-Prices drop on strong pipeline and LNG supply

Reuters - UK Focus

LONDON, Nov 26 (Reuters) - British wholesale gas prices dropped on Tuesday morning due to strong domestic production, a rise in Norwegian flows and a flurry of liquefied natural gas (LNG) cargo arrivals.

* The within-day contract dropped by 1.45 pence to 41.40 pence per therm by 0925 GMT.

* The day-ahead contract fell by 1.25 p to 41.50 p/therm.

* Britain's gas system was oversupplied by 10.4 million cubic metres (mcm), with demand forecast at 265.3 mcm and supply expected at 275.7 mcm/day, National Grid data showed

* Flows from the UK Continental Shelf increased by around 8 mcm from Monday, with total production at 126 mcm/ day, Refinitiv Eikon data showed.

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* Norwegian gas flows to Britain rose by around 4 mcm from Monday volumes to 101 mcm/day, Gassco data showed.

* Sendout from LNG terminals dropped on Tuesday, but four new LNG cargoes will be unloaded in Britain in the first half of December, which could keep the UK gas system oversupplied.

* A total of nine cargoes are expected in Britain between Nov. 28 and Dec. 16.

* On the demand side, consumption in December is expected to be higher than the previous forecast with temperatures in the first half of the month well above the seasonal norm, Refinitiv analysts said in a morning report.

* But they added that there is a milder-than-normal outlook for early January.

* On Tuesday, overall gas demand was expected to be softer compared to Monday and also lower than previously forecast, a bearish factor for prompt prices.

* Residential demand is expected to be rising from Wednesday on colder weather, but predicted to weaken next week.

* Gas-for-power demand is seen rising on Wednesday too.

* Further out on the curve, contracts also fell.

* The December contract dropped 0.85 pence to 42.10 p/therm

* The January contract fell 0.45 p to 43.65 p/therm.

* The day-ahead gas price at the Dutch TTF hub fell by 0.47 euro to 16.13 euros per megawatt hour.

* The benchmark Dec-19 EU carbon contract edged down by 0.12 euro to 24.32 euros per tonne (Reporting by Ekaterina Kravtsova; editing by Nina Chestney)