UPDATE 4-TransCanada delays restart of Keystone pipeline to Tues -traders

(Adds comments by TransCanada spokesman)
By Catherine Ngai and Liz Hampton
NEW YORK/HOUSTON, April 6 (Reuters) - The sudden closure and
subsequent delay in restarting the Keystone crude pipeline has
caused traders to sell off heavy Canadian oil for immediate
delivery, trading sources said on Wednesday, while temporarily
lending support to U.S. futures markets.
TransCanada Corp TRP.TO delayed the restart of its 590,000
barrel per day Keystone crude pipeline to next Tuesday at the
earliest from Friday originally, four traders familiar with the
matter said on Wednesday.
The line, which delivers crude from Hardisty, Alberta to
Cushing, Oklahoma, and on to Illinois, was shut over the weekend
after a potential leak. TransCanada had told shippers on Tuesday
the pipeline would restart by next Tuesday at the earliest,
trade sources said.
A TransCanada spokesman confirmed in an email that the
company had informed customers during a subsequent call on
Wednesday afternoon that next Tuesday remained the best-case
scenario for a restart.
"Quick fix is not how we would characterize this, at all,"
TransCanada spokesman Mark Cooper said, adding that the company
has made "significant progress" in pinpointing the source of the
problem in a safe manner.
He said the company would like the pipeline to be
operational as quickly as possible, but is focusing on doing so
safely and with regulatory support.
TransCanada also said it was going to ask the Pipeline
Hazardous Materials Safety Administration (PHMSA) to
repressurize the line in order to find the leak, a source said,
a move which could potentially expedite its restart.
A spokesman for PHMSA said it was still monitoring the
situation and that the oil spilled is Surmont heavy-blend crude.
In a shipper notice, TransCanada also said it was curtailing
shipments on its pipeline by 35 percent for the remainder of
April.
The outage, which stemmed the flow of Canadian crude further
south, caused cash prices to dive to a two-month low below the
West Texas Intermediate CLc1 benchmark. CRU/CA
Time spreads in U.S. crude futures contracts rallied late
Tuesday following news of the delay, with May WTI trading as
tightly as 98 cents a barrel below June WTI, up from a $1.46 a
barrel discount earlier in the day CLc1-CLc2 .
News of an extended delay also boosted futures prices, as
traders pointed out that it would divert crude otherwise moving
toward Cushing, Oklahoma, delivery point of the contract.
The outage has forced refiner Phillips 66 (NYSE:PSX) PSX.N to cut run
rates and shut units at its 306,000 bpd Wood River refinery.