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UK GAS-Within day price falls as high wind power reduces gas demand

Tuesday, 23 July 2019 | 00:00

British wholesale gas for immediate delivery fell on Monday as low demand, in part due to high wind power generation, pushed the system into oversupply.

* Within day gas fell 1.0 pence to 28 pence other therm by 0740 GMT.

* Day-ahead gas was 0.2 pence higher at 29.00 pence per therm.

* The system was oversupplied by 24.3 million cubic metres (mcm) with demand forecast at 132.0 mcm and supply seen at 156.3 mcm, National Grid data showed.

* Peak wind generation is expected at 10.3 gigawatts out of a total metres capacity of 12 GW, an unusually high rate.

* High wind power tends to reduce gas-for-power demand, the forecast for which was cut by 11 mcm to 52 mcm for Monday.

* The gas system was oversupplied even though flows along the Langeled pipeline from Norway were down 10 mcm to 24 mcm.

* Gas analysts at Refinitiv said they did not see a clear reason for the drop in production in Norway from outage data, which indicates out put has been cut for commercial reasons.

* A week of warm temperatures adds to the bearish picture. The average temperature forecast for the country was raised by 3.4 degrees Celsius to 20.1 degrees for Monday.

* Further out, however, there are signs that the gas market will tighten.

* Sendout from liquefied natural gas (LNG) terminals has stayed persistently low since the start of the month with fewer LNG tanker arrivals.

* On Monday, the sendout rate is expected to be 10 mcm compared to rates consistently between 30 and 90 mcm between October of last year and May of this year.

* A raft of planned maintenance starting next week in Britain is expected to reduce gas supplies by 43 mcm a day.

* In the Dutch gas market, the front-month contract edged up by 0.05 euro to 10.68 euros per megawatt hour.

* Benchmark Dec-19 EU carbon contract was 0.27 euro higher at 29.16 euros a tonne, getting close to an 11-year high of 29.50 euros a tonne.
Source: Reuters (Reporting by Sabina Zawadzki Editing by Edmund Blair)

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