UK gas falls on weather forecasts

Gas for within-day delivery slipped 1.65 pence to 66.50 pence per therm, a near two-week low, while day-ahead gas fell 1.40 pence also to 66.50 pence at 0940 GMT.

"Kaarstoe is recovering slowly, so that should alleviate some of the issues. The main driver today is the big warming seen for next week," a UK gas trader at a utility said.

Norway's Kaarstoe gas processing plant suffered a fire on Saturday, cutting 25 million cubic metres per day (mcm/d) of gas output from the facility that also processes gas for export to Britain.

Overall Norwegian gas production was still reduced by around 12.7 mcm/d on Monday, but flows to Britain were near full capacity, and Kaarstoe was expected to regain full output in the early part of this week.

Norway's main export pipeline to Britain, the Langeled link, was flowing at around 70 mcm/d, National Grid data showed, close to full capacity.

Temperature levels in Britain were expected to reach seasonal norms from the weekend onwards, after weeks of colder than seasonal levels that lifted prices and drained gas storage sites.

"Now the weather appears to be warming, so that will take a lot of strain off of potentially drawing from stocks," another UK gas trader at a bank said.

Britain's medium-range storage sites at Holford and Hornsea were adding around 20 mcm/d to the market as spot prices traded above front-month contracts.

March changed hands at 65.15 pence, down 0.80 pence on Friday's closing level.

Bearish prompt trading also weighed on prices on the curve, where benchmark front-season gas slipped 0.50 pence to 63.50 pence.

Brent crude prices offered little direction in thin morning trading due to the Lunar New Year holiday in Asia, but prices remained near a nine-month high close to $119 per barrel.

In Britain's over-the-counter power market, contracts traded slightly lower on the back of weaker gas prices and strong imports, while lower-than expected wind power output capped losses.

Day-ahead baseload electricity fell 1.35 pounds to 50.65 pounds per megawatt-hour (MWh).

Wind farms produced around 3,000 MW on Monday, nearly 1,000 MW below forecasts, National Grid data showed.

Tuesday wind power production was expected to fall further to around 1,500 MW.

Imports from France were near full capacity at around 1,500 MW, and Britain's nuclear plants were adding slightly more power to the market than over the weekend.

"Nukes are a little firmer and imports from France are up to 1,500 MW," another UK energy trader said.