Hurricane Alex spins past oil rigs toward Mexico

PLAYA BAGDAD, Mexico (Reuters) - Alex strengthened into a Category 2 hurricane in the Gulf of Mexico on Wednesday and was due to hit the Mexican coast in a few hours, but it stayed clear of oil fields to the relief of crude markets.

The hurricane hampered efforts to control the massive BP Plc oil spill off the Louisiana coast, and its winds of nearly 100 mph bent over palm trees and lashed the port city of Matamoros across from Brownsville, Texas.

Rain from the first named storm of the 2010 Atlantic season swamped beaches, as soaked Mexican marines in towns in Tamaulipas state ushered residents into shelters as 10-foot (3-meter)-high waves slammed into the shore.

"We're getting out of here, this looks really ugly," said a 50-year-old housewife who gave her name as Juana as she packed belongings into a truck in the beach town of Playa Bagdad.

Alex was set to hit the Tamaulipas coast in a few hours, the U.S. National Hurricane Center said at 6 p.m. (2300 GMT), but its rains had already flooded highways as far inland as the industrial city of Monterrey and the center warned of isolated tornadoes in south Texas.

Families boarded up homes, and Texan authorities urged people to leave beach towns as strong winds tipped over trailers and bands of intense rain lashed the area.

Alex has forced oil and gas companies to cut back production, but the hurricane was well southwest of major U.S. offshore facilities.

Oil prices have fallen since Friday as Alex's path churned away from U.S. oil fields, but energy companies still shut down production of more than 421,000 barrels per day of oil, about a quarter of the Gulf's output, as a precaution.

They have also shut 919 million cubic feet per day of gas output, some 14 percent of the Gulf's total."

Mexican state oil monopoly Pemex has kept its oil platforms, which are farther south in the Gulf, operating since Alex formed, and the government on Wednesday reopened the Gulf ports of Cayo Arcas and Dos Bocas, which ship about 80 percent of Mexico's crude exports, as Alex moved on. The ports had been closed since Sunday.

Alex was located about 105 miles south of Brownsville, and moving west at 12 mph, the Miami-based hurricane center said. "Additional strengthening is possible before landfall," the center added.

OIL CLEANUP HAMPERED

Despite 7-foot (2.1-meter) seas and winds gusting to 25 mph at the site of the BP leak, crews continued to capture oil and drill relief wells. Efforts to burn off and skim spilled oil and spray dispersants had to be suspended. Officials said oil capturing and drilling would have to stop if the winds reach 46 mph.

Houston Ship Channel traffic was halted due to rough seas from Alex, the U.S. Coast Guard said on Wednesday.

Tankers on the channel provide crude oil to eight refineries in Houston and Texas City, Texas. The refineries account for more than 10 percent of U.S. refining capacity.

Forecasters expect Alex to drench Tamaulipas and southern Texas with 6 to 12 inches of rain, risking flooding, and drive dangerous storm surges along the coast.

Texas Governor Rick Perry authorized deploying up to 2,500 state military personnel to help with storm preparation and response. Transport officials in the Rio Grande Valley monitored evacuation routes and storm shelters, and mobile feeding canteens and kitchens were prepared.

A hurricane warning was issued for the coast of Texas south of Baffin Bay down to the mouth of the Rio Grande, and along the coast of Mexico to La Cruz. A tropical storm warning extended down to Cabo Rojo, south of the port city of Tampico.

The Atlantic hurricane season runs from June 1 to November 30 and meteorologists predict an active season this year. Alex is the first June storm in 15 years to gain hurricane strength in the Atlantic.

(Additional reporting by Cyntia Barrera and Patrick Rucker in Mexico City, Robin Emmott in Monterrey, and Anna Driver in Houston; editing by Mohammad Zargham)