Dolly is predicted to come ashore on July 23 at the southern tip of Texas, where the border meets Mexico, and south of the main U.S. production areas, the National Hurricane Center said at 8 p.m. Miami time. The northern Gulf of Mexico accounts for about 25 percent of U.S. oil production.
Crude oil for August delivery fell as much as 73 cents, or 0.6 percent, to $130.31 a barrel on the New York Mercantile Exchange. It was at $130.44 a barrel at 9:24 a.m. Singapore time. Futures are up 74 percent from a year ago.
Yesterday, futures rose $2.16, or 1.7 percent, to settle at $131.04 a barrel. It was the first increase in five days. The August contract expires today. The more-active September futures declined 54 cents, or 0.4 percent, to $131.28 a barrel at 9:26 a.m. Singapore time.
Oil settled at $128.88 on July 18, the lowest close since June 5. Prices dropped 11 percent last week, the most in more than three years, on signs of slowing global economic growth and faltering U.S. fuel demand.
Brent crude oil for September settlement fell as much as 71 cents, or 0.5 percent, to $131.90 a barrel on London's ICE Futures Europe exchange. It was at $131.99 a barrel at 9:12 a.m. Singapore time. The contract yesterday rose $2.42, or 1.9 percent, to settle at $132.61 a barrel. Prices climbed to a record $147.50 on July 11
Dolly's tropical storm-force winds extend outward as far as 175 miles and the storm, moving toward the west at 16 miles per hour, is expected to gradually decrease forward moving speed, the hurricane center said. The center of the storm was about 405 miles (650 kilometers) east-southeast of Brownsville, Texas.
Royal Dutch Shell Plc, Europe's biggest oil company, has started evacuation of personnel from oil platforms in the Gulf of Mexico because of the approaching storm. The company removed about 125 people from its operations in the western part of the Gulf July 20, and was planning to evacuate another 60 yesterday, it said in an e-mailed statement.
Exxon Mobil Corp., the world's biggest energy company, said it was preparing platforms for heavy rain and high winds.
No oil or natural-gas production has been shut as a result of the approaching storm, the Minerals Management Service, part of the U.S. Interior Department, said yesterday.
Petroleos Mexicanos, Mexico's state oil company, produces about 1.07 million barrels of oil a day in the Bay of Campeche, which is south of the projected track of the storm. Dolly isn't expected to reach company platforms after it enters the Gulf, Petroleos Mexicanos spokesman Javier Delgado Pena said in a telephone interview yesterday.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina shut 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
The North Atlantic hurricane season runs from June through November. September is historically the busiest month for storms and hurricanes.