Tropical Storm Gustav still an energy concern

NEW YORK (Reuters) - Gustav weakened to a tropical storm overnight after slamming into southwest Haiti on Tuesday, but the system was expected to restrengthen once it moves back over the warm waters between Haiti and Cuba, the U.S. National Hurricane Center said in its latest report.

At 8 a.m. EDT, Gustav was located about 90 miles west of Port-au-Prince, Haiti, and about 120 miles southeast of Guantanamo, Cuba, moving northwest at 5 miles per hour with maximum sustained winds down to about 60 miles per hour.

Gustav was expected to regain Category 1 hurricane strength by Thursday once it leaves Haiti.

Most computer weather models still showed the storm heading northwesterly, skirting the southern coast of Cuba, then entering the central Gulf of Mexico on Sunday.

While extended hurricane track projections are not always accurate, the current path for Gustav has it sweeping through key oil and natural gas producing areas off the coast of Louisiana or Texas by late Monday or early Tuesday as a powerful Category 3 storm with winds of about 120 mph.

U.S. crude oil prices gained more than $1 a barrel or 1 percent on Tuesday and were up more than $1 early Wednesday on concerns that Gustav could damage offshore oil platforms or disrupt key U.S. Gulf Coast refining operations.

U.S. natural gas prices spiked nearly 6 percent Tuesday and tacked on another 5 percent early Wednesday amid storm fears.

Nearly a quarter of U.S. crude oil and 15 percent of the nation's natural gas are produced in the Gulf of Mexico.

The NHC was also monitoring a large area of low pressure several hundred miles northeast of the northern Leeward Islands. Upper level winds were expected to gradually become more favorable for development of this system over the next couple of days, but the projected track showed it steering in a north or northwesterly direction, toward the U.S. East Coast.

There was also another large tropical wave located over the far eastern Atlantic several hundred miles west-southwest of the Cape Verde Islands. This system has some potential for slow development during the next couple of days as it moves generally westward at 10 to 15 mph.

The next report will be issued by the NHC at 11 a.m.

(Reporting by Joe Silha, editing by John Picinich)