LONDON, June 23 (Reuters) - British curve gas contracts fell on Thursday morning, as economic
concerns continued to weigh on macro-fundamentals while a rout in the carbon market impacted prices from within the power generation sector.
Winter 11/12 gas prices opened above 70 pence per therm (p/th) in the morning, but when Brent crude prices and the euro began to fall, gas prices followed suit and gained further bearish momentum through an extremely bearish carbon market.
By 1030 GMT, NBP Winter 11/12 gas was trading around 69.60 p/th.
Front-month Brent crude prices fell from over $113 a barrel in the morning to below $112 a barrel and the euro dropped from $1.4333 in the morning to $1.4242 at 1015 GMT.
But by far the steepest drops were registered in the carbon market, where the benchmark EUA December 2011 contract fell as low as 13.25 euros a tonne, its lowest value since early February 2010.
This means that the contract has lost about 20 percent in value in the past nine days.
'The rout in the carbon market is driven mainly by funds selling out of their long positions, along with those many are also terminating positions in gas and power,' one trader said.
'Adding to this the bearish sentiment on the macro-economic front and you're looking at a pretty strong wind blowing towards the South,' he added.
On the front of the curve spot markets were fairly stable, as there was not much change, with the system remaining slightly short.
Spot gas prices for next day delivery were around 57.90 p/th, about the same level as the previous day.
Because Fridays usually see a drop in demand, this sideways movement resembled a tightening of the system as LNG flows into Britain remained low.
'Despite relatively low supplies, the system remains stable because industrial demand is low and interconnector flows to Europe have dropped lately, as the continent is pulling more gas directly from Norway,' one trader said.
With spot delivery prices higher than those for delivery in July, August and September, there is an incentive to hold off injecting gas until a later date and instead sell your supplies immediately.
The July gas contract was at 57.05 p/th around 10:30 GMT. August was at 57.30 p/th and September around 57.35 p/th.
OLDBURY NUCLEAR EXTENSION
In the power market, prices mirrored movements in the gas market, with spot prices moving sideways and curve markets turning South.
Power prices for baseload (24 hours) delivery on Friday were trading around 50.154 pounds per megawatt-hour (MWh), flat with Wednesday afternoon, and Winter 11/12 base prices were down slightly to 56.80 pounds a MWh.
E.ON said on Thursday that the second out of three turbines at E.ON's Isle of Grain gas-fired power plant in Britain became commercially available on Thursday.
Unit three is yet to be commissioned and unit one was commissioned 10 days ago.
Also on Thursday morning, Centrica said that the UK's new nuclear power plant, initially scheduled to come online in 2018, would be delayed.
(Reporting by Henning Gloystein; Editing by Alison Birrane) ((henning.gloystein@thomsonreuters.com; +44 207 542 6659; Reuters Messaging: henning.gloytsein.reuters.com@reuters.net))
