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UK GAS-Within-day dips on oversupply but oil gains prop up curve

* Spot gas price dips around 0.50 pence to 33.05 p/therm

* Stronger sterling vs euro adds to bearish mood

July 14 (Reuters) - British gas for immediate delivery fell on Thursday morning as rising Norwegian flows left the system oversupplied and the pound strengthened against the euro, while rallying oil prices supported forward contracts.

Gas for instant delivery fell by around 0.50 pence/therm to 33.05 p/therm, according to one gas trader.

"The pound is stronger against the euro and higher flows from Norway through the Vesterled pipeline are helping bring prompt contracts lower," Inenco gas trader Dorian Lucas said.

Sterling's gains against the euro makes UK gas more costly for European buyers and therefore reduces demand, putting extra downward pressure on prices, traders said.

Expectations of interest rate cuts and the appointment of Britain's new Prime Minister Theresa May helped buoy the pound following the political vacuum created after Britain voted to leave the European Union.

Meanwhile, Britain's gas grid is around eight million cubic metres/day (mcm) oversupplied with demand estimated at 195 mcm, according to National Grid (LSE: NG.L - news) data.

"Norwegian supplies through Vesterled have (nearly doubled) to 23 mcm, pushing combined flows into St Fergus Total (terminal) to a three monthly high of 51 mcm/day," Wingas UK head of trading Marcel Boonaert said.

Despite an overall rise in supply, maintenance at Conoco Phillips' J-Area gas fields continues to curb flows into the Teesside PX terminal, analysts at Thomson Reuters (Dusseldorf: TOC.DU - news) said.

Temperatures in Britain are forecast to be above average by the weekend and next week and LNG supply looks healthy.

Higher oil prices supported curve gas contracts, however, with benchmark winter 2016 gas up 0.24 pence to 43.79 p/therm.

Oil prices rallied from sharp losses on Thursday but brokers said the downtrend could resume soon as record-high stocks and worries over slowing economic growth dampened sentiment.

In the Netherlands, the day-ahead price at the TTF hub was up by 0.07 euro at 14.27 euros per megawatt-hour.

In Europe's carbon market, the front-year EU allowance price was 0.01 euro lower at 4.80 euros per tonne. (Reporting by Oleg Vukmanovic; editing by Nina Chestney)

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