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UK gas falls as Norway imports regain

Monday, 8 Oct 2012 | 5:46 AM ET

* Langeled flows rise near 70 mcm/d

* Curve slides with oil as Asia growth forecast cut

* Low wind supports power prices

LONDON, Oct 8 (Reuters) - British prompt gas prices eased on Monday as imports from Norway via the Langeled pipeline regained full strength following processing problems last week, while milder weather forecasts for October also helped keep a lid on gains.

Gas for within-day delivery slipped to 62.20 pence, down 0.05 pence on Friday's closing level at 0830 GMT and day-ahead gas

traded down at 62.30 pence.

"The market is down this morning. Norwegian producers have increased flows today after maintenance and the weather has come in slightly warmer for October," a UK gas trader at a bank said.

Langeled imports rose to nearly 70 million cubic metres per day (mcm/d) on Monday, after a hiccup last week to restart Norway's main plant processing gas for export, Kollsnes, was resolved.

Problems to fully restart the Kollsnes plant last week spooked some traders and the fact that Monday's within-day gas price was not significantly lower showed that some participants maintained long positions due to scepticism about the facility's reliability, one market analyst said.

The UK gas system was well supplied on Monday thanks to the surge in Norwegian imports and steady flows from the Netherlands. The UK gas premium over Belgian gas prices also incentivised some gas flows into Britain via the Interconnector pipeline, National Grid data showed.

Losses on the prompt also weighed on the front months, with November shedding 0.65 pence to 63.45 pence and December trading at 65.35 pence, down 0.35 pence on the previous session.

Summer 2013 gas

slid in line with a weak oil price, which reacted to the World Bank cutting its economic growth outlook for East Asia and the Pacific, home to two of the world's largest oil consuming nations.

The front-season gas price fell 0.25 pence to 60.75 pence, while winter 2013/14 gas traded down 0.45 pence at 69.60 pence.

In Britain's over-the-counter power market short-term prices rose on the back of a downward revision in wind power production forecasts.

"Low wind predominantly is leaving the system reasonably tight," said on UK power trader.

Baseload day-ahead electricity traded at 45.40 pounds per megwatt-hour, up nearly 2 pounds on Friday's spot trading level.

Wind power output was expected to drop below 600 MW on Tuesday and Monday's levels turned out around 300 MW less than forecast, National Grid data showed.

(Reporting by Karolin Schaps; Editing by Alison Birrane)

((karolin.schaps@thomsonreuters.com)(+44)(0)(207 542 6622)(Reuters Messaging: karolin.schaps.reuters.com@reuters.net))

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Keywords: MARKETS BRITAIN GAS/POWER

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