* Gas prices tracking strong oil
* Brent crude up 11.5 pct in February
* Mild weather dominates spot market
LONDON, Feb 23 (Reuters) - UK forward gas prices rose
to their highest level since mid-November on Thursday morning,
driven by rising oil prices.
The benchmark gas contract for delivery in summer
rose to 60 pence per therm for the first time since 23 November.
Traders said the recent rises were largely down to sharp
increases in oil prices, which have been pushed up over
heightened tension between Iran and the West together with a
weaker dollar.
Front-month Brent crude prices have risen almost
11.5 percent since the beginning of February.
"The gas market cannot ignore rises like that, especially
not UK gas, which relies heavily on Qatari LNG imports and hence
suffers from the same Iran fears that the oil market does in the
Middle East," one gas trader said.
This means the contract has risen above all its 50, 100, and
200 exponential daily moving average (DMA) values.
UK government statistics on Thursday showed liquefied
natural gas (LNG) imports (largely from Qatar) equaled pipeline
supplies from Norway in 2011 for the first time.
But the same data also showed mild weather and reduced
industrial use as a result of the weak economy meant that UK gas
demand in 2011 dropped to its lowest level since
1995.
On the spot market, prices were less firm as warm weather
kept a lid on demand for heating gas.
Gas for within-day delivery was trading around 59.45 pence
per therm at 1015 GMT, down 1.55 pence since Wednesday
afternoon, and at 59.55 pence, day-ahead gas prices moved
sideways since Wednesday.
Point Carbon analysts said lower consumption forecasts meant
the price outlook for day-ahead gas prices was bearish at 58.90
to 59.60 pence a therm.
But storage facilities may use this opportunity to inject,
which could offset the bearish impact of lower demand, the
analysts said.
Britain's gas storage facilities were filled to an average
of 43.57 percent on Wednesday, almost 3.5 percent below the
European average, and down from around 75 percent in January,
according to Gas Infrastructure Europe data.
DEMAND AND SUPPLY
Mild weather meant Thursday's gas demand was expected to be
at 266.2 million cubic metres (mcm), almost 22.5 percent below
the seasonal norm of 325.9 mcm, according to National Grid.
Despite the low demand, the system was expected to be 8.8
mcm short.
WEATHER
The UK's Met Office said it expected temperatures on Friday
to remain mild, with 13 degrees Celsius possible in the southern
England, and 6 degrees in the North of Scotland.
By Saturday, temperatures would drop back into single digits
across the country, the Met Office said.
POWER
Day-ahead baseload power prices traded at 42.75 pounds per
megawatt hour, down 10 pence day on day.
Bearish demand on the back of mild weather was offset by the
outage of EDF Energy's 480-megawatt Hinkley Point B7.
