PORT-AU-PRINCE Tropical Storm Gustav pulled away from Haiti and the Dominican Republic on Wednesday after killing 23 people and threatened to become a major hurricane aimed at New Orleans and Gulf of Mexico oil fields.
U.S. crude settled up $1.88 at $118.15 a barrel, adding to two days of gains, while London Brent crude traded $1.59 higher to $116.22 as traders pondered the storm's potential impact on U.S. energy facilities in the Gulf.
The strategic area is home to a quarter of U.S. oil production and 15 percent of its natural gas output.
While the storm's eventual U.S. landfall could be anywhere from the Florida Panhandle to Texas, one of its likely tracks was toward New Orleans, the southern U.S. city devastated by Hurricane Katrina in 2005.
Gustav was projected to hit the U.S. Gulf Coast around Monday, two days after the third anniversary of Katrina, which killed 1,500 people and caused at least $80 billion in damage in several Gulf Coast states.
Louisiana Gov. Bobby Jindal put New Orleans residents on alert, saying evacuations could begin as early as Friday. Energy companies began ferrying workers from offshore oil rigs.
The seventh storm of what experts have predicted will be an unusually busy Atlantic hurricane season lingered for a day near Haiti, an ominous development for the impoverished nation of 9 million people where hillsides have been stripped of trees and heavy rains frequently cause disastrous mudslides.
Gustav's torrential rains, predicted to total up to 25 inches in some areas, triggered floods and mudslides that killed at least eight people in the Dominican Republic and 15 in neighboring Haiti, officials said.
Among the dead in Haiti, where Gustav made landfall as a Category 1 hurricane on Tuesday, were at least three people killed in a mudslide, a woman who died trying to cross a river and another person hit by a falling tree, officials said.
In the Dominican Republic, seven people from the same family were buried under mud when a hillside collapsed just north of Santo Domingo.
FLAGGING BUT ONLY FOR A WHILE
Gustav was 90 miles southeast of Guantanamo Bay in Cuba, where a U.S. naval base housing accused terrorists is also located, at 5 p.m. EDT (2100 GMT), and moving west-northwest near 3 mph (6 kph), the U.S. National Hurricane Center said.
Its top sustained winds dropped to 50 mph (85 kph) as it struggled over Haiti's rugged mountains, below the 74 mph (119 kph) threshold for hurricanes.
But Gustav was on a path that forecasters said would allow it to regain strength over deep warm waters south of Cuba and it was likely to enter the Gulf of Mexico as the first major hurricane to threaten U.S. energy installations there since Katrina and Rita in 2005.
Major hurricanes are those that rank from Category 3 upward on the five-step Saffir-Simpson scale of intensity.
"There is a strong probability that it will be a Category 3 storm by the time it enters the Gulf, and it has the potential to strengthen into a Category 4 or 5 storm over the Gulf," said John Kocet, a meteorologist with forecaster AccuWeather.
Katrina and Rita were Category 5 storms in the Gulf when they cut off about a quarter of U.S. oil and gas production by damaging offshore platforms and severing pipelines.
Gustav could shut down 85 percent of U.S. production platforms in the Gulf, private forecaster Planalytics said.
Computer models indicated Gustav would probably steer between Cuba and Jamaica, pass near the wealthy Cayman Islands and then Cuba's westernmost tip.
Officials evacuated around 50,000 people from flood-prone areas in eastern Cuba, according to state TV.
Former Cuban leader Fidel Castro praised his country's ability to cope with storms and criticized the United States.
"Fortunately we have a Revolution! It's guaranteed that nobody will be forgotten," he wrote in an Internet column. "If lives are lost, it won't be hundreds or thousands."
(Additional reporting by Bruce Nichols in Houston, Robert Gibbons and Richard Valdmanis in New York, Jeff Franks in Havana; Writing by Tom Brown; Editing by Michael Christie and Eric Walsh)