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UK gas prices remain firm on shaky Norwegian flows

Friday, 5 Oct 2012 | 4:44 AM ET

* Norwegian flows improve but uncertainty remains

* Kollsnes flows to remain reduced until Monday

* Despite uncertainty, UK gas system seen 20 mcm long

LONDON, Oct 5 (Reuters) - British prompt gas prices remained firm on Thursday morning despite rising Norwegian supplies leaving the system oversupplied.

Gas prices for next day delivery

were trading around 61.50 pence per therm, up 0.1 pence since Thursday morning, and prices for delivery within the day were also trading at 61.50 pence.

The slight rise came despite a increased flows from Norway, where a glitch at the Kollsnes gas processing plant that feeds gas into pipelines to Britain and continental Europe on Thursday had interrupted supplies.

"Flows from Norway may have improved, but Kollsness is still unstable and until we see the situation fully resolved, we traders are going to price in a risk of renewed supply cuts," one gas trader said.

Flows through the 70 million cubic metres (mcm) per day capacity Langeled gas pipeline connecting Norway with Britain were around 60 mcm on Thursday morning.

Norway's gas system operator Gassco said that Kollsnes would have reduced output until Monday.

Britain's gas demand was expected to be 188.6 mcm on Friday, according to data from National Grid.

With flows seen at 208.1 mcm, the system would be almost 20 mcm oversupplied, opening the possibility of storage injections to prepare for the winter heating season.

Britain's gas storage sites are filled to an average of around 94.5 percent, according to data from Gas Infrastructure Europe, down from almost 98 percent in August.

In the electricity markets, power prices for baseload (24 hours) delivery the next day were trading around 43.50 pounds per megawatt-hour (MWh), slightly down from the previous day, reflecting lower demand during the weekend.

The UK's MetOffice said that it expected conditions to be rainy between Friday and Saturday, and dry but colder on Sunday.

(Reporting by Henning Gloystein, editing by William Hardy)

((henning.gloystein@thomsonreuters.com)(44 207 542 6659)(Reuters Messaging: henning.gloystein.thomsonreuters.com@reuters.net))

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Keywords: MARKETS BRITAIN GAS/POWER