UK gas down as mild weather reshapes trade sentiment

* Gas network is 16 mcm/day undersupplied

* Forecasters see ongoing mild temperatures

* UK day-ahead power price down

London, Feb 14 (Reuters) - British spot gas prices dropped on Tuesday morning as the onset of mild weather reshaped trading sentiment after the worst cold spell in decades, pulling down prices across the near term.

UK day-ahead gas were down one pence to 56.50 pence per therm at 0945 GMT, while within-day dropped by the same amount to 57.50 pence.

The falls defied some bullish drivers, including an undersupplied transmission system caused by cuts in flow from small- and mid-sized storage sites.

"The weather has turned and that is giving people a lot more selling comfort," one trader from a major UK utility said.

"Our forecasters are telling us that it is very unlikely the cold will return ...we're just no longer threatened by the Siberian," he said.

Forecasters at Point Carbon expect temperatures to stay mild compared with the past two weeks, predicting 10 degrees Celsius over the weekend and slightly below that level next week.

The UK's Met Office also sees milder temperatures through the week.

Month-ahead gas was little changed at 55.85 pence, while the benchmark summer 2012 gas contract edged about 0.10 lower to 54.75 pence.

DEMAND AND SUPPLY

Britain's gas market was 15 million cubic metres undersupplied by gas on Tuesday, as falling prices reduced the commercial incentive to withdraw gas from some storage sites, with small- and mid-range facilities going offline.

That took about 16 mcm/day out of the market on Tuesday, roughly equivalent to the size of the shortfall.

POWER

UK day-ahead power for 24-hour delivery fell 2.65 pounds per megawatt hour, in line with gas market sentiment and comfortable supply margins. (Reporting by Oleg Vukmanovic; editing by Jason Neely)