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UK GAS-Prices rise on undersupply, increased demand

* Day-ahead touches intra-day high of 35.60 p/therm

* Demand is around 24 mcm above seasonal norm

* System undersupplied by 33.5 mcm/day

June 2 (Reuters) - British wholesale gas prices rose on Thursday morning in response to an undersupplied system and increased demand for gas for heating.

Gas for day-ahead delivery was 1.50 pence higher at 35.40 pence per therm at 0800 GMT, having risen as high as 35.60 pence in earlier trade.

Gas for instant delivery was up 1.10 pence at 35.70 p/therm.

Demand was forecast to be 192.6 million cubic metres (mcm) on Thursday - well above the seasonal norm of 169 mcm - and flows are at 159.1 mcm, National Grid (LSE: NG.L - news) data showed.

This leaves the system 33.5 mcm undersupplied.

"Prices are rising because demand has been high this week for June because of the colder weather and outages are hindering flows," a UK-based gas trader said.

Demand for gas for heating has increased strongly over the past few days due to colder weather than normal for the time of year. However, temperatures are forecast to start rising over the weekend, according to the Met Office.

On the supply side, UK Continental Shelf flows are down due to an unplanned outage at the North Morecambe gas sub-terminal.

Teesside gas processing plant will also start an outage on Friday which will last until June 14, while the CATS terminal and pipeline will undergo maintenance from June 6 to July 1.

Flows through the Langeled pipeline from Norway are still low at around 26 mcm/day due to planned maintenance on the Norwegian Continental Shelf.

In the Dutch gas market, the day-ahead price at the TTF hub was 0.15 euro higher at 14.50 euros per megawatt hour.

In the European carbon market, front-year EU allowances inched up by 0.04 euro to 6.01 euros a tonne.

"We do not expect prices to bounce materially and sustainably any time soon (barring exogeneous drivers such as the approval of the French carbon price floor proposal)," Societe Generale (Swiss: 519928.SW - news) analysts said in a note.

(Reporting by Nina Chestney)

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