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UK GAS-Prices drop on large oversupply, mild weather

British wholesale gas prices fell on Monday as lower consumption due to warmer weather left the market heavily oversupplied.

* Within-day gas fell 7.65 pence, or 12.5 percent, to 53.75 pence per therm by 0845 GMT

* Day-ahead gas fell 2.5 pence to 57.50 pence per therm

* Despite the steep fall for the within-day price, its current level is still higher than last Monday’s price close after a steep climb with the return of trading after New Year’s Day

* Gas demand was expected at 275 million cubic metres (mcm) and supply seen at 332 mcm, leaving the system oversupplied by 57 mcm

* Weather forecasters monitored by Refinitiv gas analysts raised their temperature forecast by 6.5 degrees Celsius for Monday to 8.2 degrees Celsius, far above the 4.4 C norm for this time of year

* Domestic consumption, much of it for heating, is expected at 193 mcm, 58 mcm lower than on Friday, according to Refinitiv gas analysts

* Gas for power demand was also lower at 64 mcm versus 85 mcm on Friday

* Peak wind generation, which tends to lower gas demand when it is at high levels, is seen at almost full capacity at 11.5 gigawatts on Monday compared to just 3.2 GW on Friday

* Supply of liquefied natural gas (LNG) was expected at 23 mcm, down 10 mcm from Friday, but still at high levels compared to the previous two years’ of subdued imports

* A tanker from Qatar is due to arrive next weekend, adding to three due this week

* Prices along the curve also fell, with the weekend price down 5 percent to 57 pence per therm and the February contract down 4.2 percent to 60.50 pence per therm

* In the Dutch gas market, the day-ahead contract fell 0.67 euro to 21.38 euros per megawatt hour

* Benchmark Dec-19 EU carbon contract fell 0.42 euro to 23.31 euros per tonne
Source: Reuters (Reporting by Sabina Zawadzki; editing by Jason Neely)

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