BP Share News (BP.)

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 initially fellbelow $5 a barrel, its lowest level in a week, but stood at$5.09 a barrel at settlement.

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 forNovember delivery rose 55 cents in early trading to $3.65 abarrel over the benchmark front-month futures contract but laterfell back to $3.10 a barrel over futures, flat to Tuesdaylevels.

Large volume of selling continued on Midland gradesWednesday with November West Texas Intermediate crude trading at 80 cents and then 95 cents under futures, comparedwith 65 cents under on Tuesday.

West Texas Sour fell 20 cents to trade at $2.00 abarrel under the front-month contract.

Mars sour was slightly lower at $1.80 a barrel underfutures, after trading earlier at $1.40 and $1.45 under futures.

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)