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UK GAS-Prompt prices firm as Netherlands flows drop

Reuters - UK Focus

* UK gas system undersupplied by 6 mcm

* Norwegian imports pick up

LONDON, June 29 (Reuters) - British wholesale gas prices for prompt delivery edged higher on Monday, supported by tight supply in the Netherlands, while forecast warm weather weighed on prices for the remainder of the week.

Gas for next-day delivery was trading at 42.00 pence per therm by 0809 GMT, 0.2 percent lower than its last settlement, while gas for immediate delivery edged up 0.1 percent to 42.10 pence per therm.

National Grid (LSE: NG.L - news) data showed the system to be 6 million cubic metres (mcm) short, with demand forecast at 200 mcm and supply at 194 mcm.

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Analysts said that while flows were picking up from Norway as the Ormen Lange field came out of maintenance, this was countered by flows from the Netherlands in Britain drying up.

"This is a core reason why the UK grid is short and could be a reflection of physical tightness in the Netherlands," Thomson Reuters Point Carbon analysts said.

Norwegian pipeline gas exports to Europe surged on Monday as the country's second-biggest field, Ormen Lange, was ramping up output after annual maintenance, data from gas system operator Gassco showed.

The weather outlook is mainly dry and sunny over the next week, with temperatures forecast to be between 25 and 30 degrees Celsius, which is likely to curb gas demand.

One trader said there was a combination of factors keeping gas prices under pressure including warm weather, strengthening sterling against the euro, weaker oil prices and higher Norwegian imports.

Dutch July gas prices at the TTF hub were 0.1 percent lower at 20.42 euros per megawatt-hour.

Imports from the Netherlands are expected to remain under pressure after the Dutch government ordered a further tightening of gas production at Groningen, Europe's largest gas field.

Europe's benchmark front-year carbon price was 2 percent lower at 7.40 euros per tonne on ICE Futures Europe. (Reporting by Sarah McFarlane; Editing by Mark Potter)