UK GAS-Prices drop on forecasts for milder weather, weaker oil
* System short 11 mcm - National Grid (LSE: NG.L - news)
* Oil holds near lowest level since 2003
LONDON, Jan 21 (Reuters) - Prompt British gas prices fell sharply on Thursday as a forecast for milder weather was expected to temper demand for heating while lower oil prices weighed on contracts all along the curve.
Gas for immediate delivery was down 1.4 pence or 4.5 percent at 29.70 pence per therm at 0948 GMT. The day-ahead contract was down 1.5 pence at 29.20 pence per therm.
The Met Office forecast temperatures rising to around 10 degrees Celsius at the weekend, above seasonal norms and signalling the end of a recent cold snap.
Benchmark Brent crude oil futures were down 30 cents at $27.58 on Thursday, after hitting their lowest level since 2003 in the previous session.
"The drop in oil prices, which has seen Brent fall by 35 percent from the start of December to mid-January, has been felt further along the gas curves as well as seemingly pressurising the front end," consultancy Energy Aspects said in a note.
Britain's gas system was undersupplied by 11 million cubic metres (mcm), with demand forecast at 350 mcm and supply at 339 mcm, National Grid data showed. Demand is seen moving closer to the seasonal norm of around 288 mcm by Friday due to milder weather.
Imports from Norway's Langeled pipeline stood at around 61 mcm, below its capacity of 72 mcm, with ongoing outages at Oseberg and Karsto.
Further along the curve, gas for March was down 0.75 pence or 2.5 percent at 29.00 pence per therm.
In the Netherlands, the day-ahead gas price at the TTF hub fell 0.57 euro to 12.48 euros per megawatt-hour.
In the European carbon market, front-year allowances were down 0.26 euro to 6.10 euros a tonne. (Reporting by Sarah McFarlane; editing by Sarah Young)