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NEW YORK, Oct 2 (Reuters) - U.S. cash crude differentialsfell broadly on Wednesday following a rally in oil futures afterTransCanada Corp said the southern leg of its KeystoneXL oil pipeline will be completed by the end of the year.
Construction of the pipeline, which will carry up to 700,000barrels per day (bpd) of oil from Cushing, Oklahoma, toNederland, Texas, is nearly 95 percent complete, TransCanadasaid.
The announcement narrowed international Brent's premium over U.S. crude since it will take barrels awayfrom the delivery point for U.S. crude futures and traders had adelay until the first quarter of 2014.
Brent's premium over U.S. crude
Separately, traders were watching a low-pressure systemhovering over the northwestern Caribbean Sea, which has a 70percent chance of becoming a tropical cyclone in the next 48hours, according to the U.S. National Hurricane Center.
The system is expected to hit the eastern sections of theoil and gas producing region in the Gulf of Mexico, said JerryPaul, a meteorologist with Thomson Reuters Weather Insight.
BP Plc said it has begun securing offshore facilitiesand rigs and is evacuating "non-essential" staff from itsThunder Horse, Na Kika, Atlantis and Mad Dog platforms in theGulf of Mexico, which are in the storm's directpath.
In the cash market, Light Louisiana Sweet
Large volume of selling continued on Midland gradesWednesday with November West Texas Intermediate crude
West Texas Sour
Mars sour
Thunder Horse crude was bid at 40 cents over futures andoffered at $1.00 over futures, with no trades recorded.
In the futures market, U.S. crude rose $2.06 a barrel tosettle at $104.10, its largest percentage gain in two weeks.Brent settled at $109.19, up $1.25 a barrel.
KEYSTONE STARTUP
A TransCanada spokesman declined to say what percentage ofthe Keystone southern leg pipeline's capacity has been committedto shippers but said the line was "overwhelminglysubscribed."
Other sources offered a different forecast. Cash crudetraders expect the contracted volumes on the pipeline to be from450,000 to 500,000 bpd, "well below commitment levels for anynew pipeline project," Morgan Stanley said in a note.
The bank said it expects the pipeline to carry 350,000 bpdto the Gulf Coast.
The line's startup, along with other pipeline projects likeSeaway, is expected to oversupply the U.S. Gulf Coast region.
"WTI is going to rush to the U.S. Gulf Coast like teen girlsto Justin Bieber," said Carl Larry, president of Houston-basedconsultancy Oil Outlooks and Opinions.
(Reporting by Selam Gebrekidan; editing by Jim Marshall)
