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UK GAS-Prices decline on correction, higher Norwegian flows

British wholesale gas prices declined on Tuesday morning as flows increased from Norway and prices corrected after gains on Monday.

The day-ahead contract declined by 0.80 pence to 106.75 pence per therm by 0834 GMT.

The system was nearly 16 million cubic metres (mcm) over-supplied, with demand forecast at 130 mcm and supply at 146 mcm/day, National Grid data showed.

Norwegian flows have increased, with higher flows via the Langeled pipeline.

Wind power output is still low, however. Peak wind generation is forecast at 1.2 gigawatts (GW) on Tuesday and 1.8 GW on Wednesday, Elexon data showed.

The September gas price at the Dutch TTF hub fell by 0.43 euro to 41.72 euros per megawatt hour, after hitting a new record high on Monday.

Supply concerns pushed prices higher, particularly a drop in flows via the Mallnow compressor station, while weak renewables output also increased gas-for-power demand.

However, Norwegian supply is expected to rise later this week and a correction of prices is likely, Refinitiv analysts said.

“North Sea production continues to suffer from significant outages, delayed from last year due to COVID, as global liquefaction issues and higher Asian demand also limit LNG deliveries to Europe,” said James Huckstepp, EMEA gas analyst at S&P Global Platts.

“Russia is now the only country with spare production, but in order to increase exports they would need to book additional capacity through Ukraine, and up to this point they have refrained,” he added.

The benchmark Dec-21 EU carbon contract inched down by 0.08 euro to 54.35 euros a tonne.

The benchmark Dec-21 British carbon contractwas slow to trade.
Source: Reuters (Reporting by Nina Chestney)

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