Gas price retreats as warm weather dulls

July 11 [Thu], 2013, 12:20
LONDON (Reuters) - British spot gas prices pared back gains on Thursday as warm weather curbed demand, leaving the system oversupplied.

Gas for Friday delivery was trading 0.60 pence lower at 64.55 pence per therm at 0737 GMT. Prices had been gaining ground over the past couple of weeks.

"The system opened long this morning, which is a bearish factor for (the within-day) contract and may pull down other NBP prompt prices," Point Carbon analysts said.

Oversupply was due to lower consumption, higher Norwegian exports as production at the Kollsnes gas processing plant resumed after a power failure and lower IUK pipeline exports, they added.

The British gas system was oversupplied by 6.4 million cubic metres (mcm) on Thursday, National Grid data showed.

Gas demand on Thursday was forecast at 156.4 mcm, below the seasonal norm of 206.8 mcm, as warm weather curbed central heating demand in many parts of the country.

Temperatures were expected to remain above 21 degrees Celsius for the remainder of the week, according to Britain's Met Office, with highs of 27 degrees on Sunday.

It forecast "a good deal of fine, dry and increasingly warm weather" over the next five-day period.

Conditions should remain fine, dry and settled across Britain over the next fortnight, it added.

"With LNG send outs from South Hook and BBL remaining reduced since July 1, the UK system needs medium-range storages to balance dampening the downward price movement," Point Carbon said.

On the power side, day-ahead baseload power fell 1.22 pounds to 47.13 pounds per megawatt hour.

EDF Energy restarted unit 8 at its Heysham nuclear power plant in the early hours of Thursday, after an unplanned outage, the company said.

(Reporting by Nina Chestney; editing by James Jukwey)