EUROPE GAS-Prices drop as temperatures ease, LNG supply rises

LONDON, Jan 11 (Reuters) - British and Dutch wholesale gas
prices fell on Tuesday morning, with milder temperatures
expected in the short term and healthy supply due from several
arrivals of liquefied natural gas (LNG) tankers this month.

The British contract for day-ahead delivery was
down 7.95 pence at 1.98 pounds per therm by 0944 GMT.

The Dutch wholesale day-ahead contract was down
1.3 euros at 82.90 euros per megawatt hour (MWh).

Britain's gas market was forecast to be oversupplied on
Tuesday, with demand at 310 million cubic metres (mcm)/day and
supply at 333 mcm/d, data from National Grid showed, with milder
temperatures than previously expected curbing demand.

Average temperatures in Britain were forecast at 7.7 degrees
Celsius for Tuesday, falling to 4.2C on Wednesday, Refinitiv
Eikon data showed.

The forecasts were 0.3C and 0.5C higher respectively than
previously.

British and Dutch front-month contracts both fell on the
expectation of high supplies of LNG as prices cooled in Asia,
making Europe a more attractive destination for cargos.

"The drop in Asia JKM (LNG) prices is depriving European
prices of the rebound we expected," analysts at Engie EnergyScan
said in a morning note.

More than 20 LNG tankers are scheduled to unload in
northwest Europe in January.

The British February contract was down 10.10
pence at 1.978 pounds/therm. The Dutch equivalent
fell by 1.87 euros to 83.13 euros/MWh.

"The outlook for strong LNG sendout should continue to
mitigate worries around curbed Russian supply and record weak
storage inventory," analysts at Refinitiv said in a daily
research note.

Flows of Russian gas on the Polish section of the
Yamal-Europe pipeline remain in reverse going eastward and
supplies on another pipeline route via Ukraine also consistently
low.

In other markets, the European benchmark December 2022
emission allowance (EUA) contract rose 2.28 euros to
82.34 euros a tonne.
(Reporting By Susanna Twidale; editing by Nina Chestney)