Oil Report

Hurricane Dolly nears Texas-Mexico coast

NEW YORK, July 23 (Reuters) - Hurricane Dolly in the western Gulf of Mexico continued to move towards the Texas-Mexico border early Wednesday, the U.S. National Hurricane Center said in its latest report.

Dolly, the second hurricane of the 2008 Atlantic season, was located about 55 miles (90 km) east of Brownsville, Texas, moving northwest at about 8 miles per hour with winds holding at about 85 mph, making it a minimal Category One hurricane on the Saffir-Simpson rating scale.

Weather models still show the storm making landfall at the Texas-Mexico border Wednesday afternoon.

A hurricane warning remained in effect for the Texas coast from Brownsville northward to Corpus Christi and for the northeast coast of Mexico.

Energy traders watch for storms that could enter the Gulf of Mexico and threaten U.S. oil and gas production facilities, but the projected track of Dolly is too far south to seriously damage or disrupt much offshore output.

On Tuesday, several oil and gas producers including Exxon, Chevron, BP, Anadarko and Apache evacuated some staff from offshore Gulf platforms as a precaution against the storm, but the reported impact on production was minimal.

The U.S. Minerals Management Service said late Tuesday that Dolly had forced producers to shut in about 5 percent of Gulf oil and gas output, or about 395 million cubic feet per day of natural gas.

Commodities traders also watch storms that could hit agriculture crops like cotton in Texas and citrus in Florida.

An intermediate advisory will be issued by the NHC at 9 a.m. EDT (1300 GMT). (Reporting by Joe Silha, editing by John Picinich)