* Drummond cuts 2014 production forecast; still oversupply

* S. Africa physical price for April up; Indian imports rise

LONDON, March 13 (Reuters) - Prices of European physical coal for delivery in May rose on Thursday afternoon as traders saw a reduction in forecast supply from Colombian miner Drummond as bullish.

Cargoes for delivery in May to the ports of Amsterdam, Rotterdam and Antwerp (ARA) were trading at $77.25 a tonne, up $0.35 from the previous settlement, while ARA cargoes for delivery in April were down $0.75 at $75.00 a tonne.

Traders said the rise in the May physical coal price was probably due to a cut in the forecast for 2014 production by Drummond DRMND.UL , the second-biggest coal miner in Colombia, on Wednesday. ID:nL2N0M91PS

Weak demand following a mild winter in Europe and healthy supply have created a global oversupply of coal, and the market is sensitive to how much more supply will be created.

"The market is still oversupplied, but Drummond's reduced production forecast has had a bullish effect," one coal trader said.

Drummond forecast its coal production at 25-26 million tonnes for this year, down from a previous forecast of around 30 million.

Its exports were shut down by the Colombian government in January because Drummond was unable to immediately comply with a new environmental law banning loading of coal using cranes and barges, but they will resume from around March 24.

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Meanwhile, South African physical contracts from its Richards Bay terminal for delivery in April were up $0.60 at $76.40 a tonne.

At Coal India COAL.NS , the world's number one coal miner, officers started a three-day strike on Thursday over pay in a move that could cut some of its 1.5 million tonnes-per-day output and tighten domestic supplies. ID:nL3N0M920T

This should increase the need for imports from abroad.

India's reliance on foreign coal, such as from South Africa, has grown over the years as local production has failed to grow in line with demand, making it the world's third-largest importer of the fuel even as it sits on the fifth-largest reserve.

India's coal imports jumped 20 percent year-on-year in February to 11.6 million tonnes as prices dipped and the rupee strengthened, data from research firm OreTeam showed on Thursday. ID:nL3N0MA2LR

(Reporting by Nina Chestney; editing by Jane Baird)

((nina.chestney@thomsonreuters.com)(+44)(0)(207 542 8071)(nina.chestney.thomsonreuters.com@reuters.net))

Keywords: MARKETS COAL/PHYSICAL