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UK GAS-Prompt gas prices fall on oversupplied system

Reuters - UK Focus

* Gas system oversupplied by 16.3 mcm

* Within-day prices fall 0.80 pence/therm

Aug 28 (Reuters) - British prompt natural gas prices fell on Friday as higher deliveries from Norway and strong LNG supplies left the system oversupplied, with more gas available for storage injection.

Prices for immediate delivery were trading 0.80 pence down at 38.20 pence per therm by around 0830 GMT, while prices for next Tuesday delivery were down by 0.12 pence to 38.55 pence/therm.

The British gas market is closed on Monday due to a public holiday.

Britain's gas system was oversupplied by 16.3 million cubic metres (mcm), with demand forecast at 197.4 mcm and flows at 213.7 mcm, National Grid (LSE: NG.L - news) data showed.

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Oversupply was partly caused by Norway ramping up exports via the Langeled pipeline after its key gas processing plant Kollsnes completed maintenance earlier this week.

"Within-day will likely need to trade at an increased discount to other contracts before storage sites take the incentive to increase injections and reduce the supply surplus," a UK-based trader said.

Storage injections were nominated at 26 mcm on Friday, but analysts said they expected injections to be at around 35 mcm, given the oversupplied system.

Injections into Britain's biggest underground gas storage Rough were nominated at 9 mcm for Friday, indicating the site has switched to a slower, single train injection mode, as previously planned.

Deliveries from UK's LNG terminals were steady at over 50 mcm, but those could drop to 35 mcm in September as there were fewer cargo arrivals planned, analysts at Thomson Reuters Point Carbon said.

Further along the curve, gas for September delivery was down 0.03 pence at 39.45 p/therm.

Gas for day-ahead delivery on the Dutch TTF market was down 0.15 euro at 19.10 euros per megawatt-hour.

In Europe's carbon market, benchmark EU Allowances (EUA) was up by 0.04 euros to 8.09 euros a tonne. (Reporting by Nerijus Adomaitis; Editing by Keith Weir)