The Associated Press

Thu, Aug 28, 2008 (7:42 a.m.)

Tropical Storm Gustav surged toward renewed hurricane force on Thursday as it drove toward Jamaica, while many miles away, New Orleans watched it with a nervous eye.

Gustav _ the cause of flooding that killed 23 in Haiti and the Dominican Republic, was nearly stationary about 80 miles (130 kilometers) east of Jamaica's capital, but it was expected to run west-southwest, very close to Jamaica later in the day, according to the National Hurricane Center in Miami.

Maximum sustained winds were near 70 mph (110 kph) and it could become a hurricane again soon.

The storm was projected eventually to reach Category 3 force, causing jitters from Mexico's Cancun resort to the Florida Panhandle and sending oil prices jumping above US$120 a barrel on Thursday on fears it could slow production of oil in the Gulf of Mexico.

October-delivery prices had dipped below US$113 a barrel on the New York Mercantile Exchange early in the week.

Royal Dutch Shell PLC has evacuated nearly 400 people and said it will bring in another 270 Thursday. It said production will be impacted.

BP PLC was also removing personnel from the region that's home to about a quarter of U.S. crude production and much of its natural gas, and Transocean, the world's biggest offshore drilling contractor, is suspending operations at all of its rigs and pulling nearly 1,600 people out of the Gulf.

Some models showed Gustav taking a path toward Louisiana and other Gulf states devastated by Hurricanes Katrina and Rita three years ago.

Jamaican authorities urged people in rural areas to seek shelter, but businesses remained open early Thursday in Kingston, where a steady drizzle was falling from dark clouds.

Emergency officials opened shelters and sent relief supplies to flood-prone areas.

Gustav hit Haiti as a hurricane on Tuesday, causing floods and landslides that killed 15 people on Haiti's deforested southern peninsula, where it dumped 12 inches (30 centimeters) or more of rain. A landslide buried eight people, including a mother and six of her children, in the neighboring Dominican Republic.

Gustav's projected track pointed directly at the Cayman Islands, an offshore banking center where residents boarded up homes and stocked up on emergency supplies.

Forecasters said Gustav might slip between Mexico's Yucatan Peninsula and the western tip of Cuba on Sunday, then March toward a Tuesday collision with the U.S. Gulf Coast _ anywhere from south Texas to the Florida panhandle.

"We know it's going to head into the Gulf. After that, we're not sure," said meteorologist Rebecca Waddington at the National Hurricane Center. "For that reason, everyone in the Gulf needs to be monitoring the storm."

New Orleans began planning a possible mandatory evacuation, hoping to prevent the chaos it saw after Hurricane Katrina struck three years ago Friday. Mayor Ray Nagin left the Democratic National Convention in Denver to help the city prepare.

Any damage to the Gulf oil infrastructure could send U.S. gasoline prices spiking.

"A bad storm churning in the Gulf could be a nightmare scenario," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "We might see oil prices spike US$5 to US$8 if it really rips into platforms."

Gustav is particularly worrisome because there are few surrounding wind currents capable of shearing off the top of the storm and diminishing its power, the hurricane center said. "Combined with the deep warm waters, rapid intensification could occur in a couple of days."

Nearly 30,000 people were evacuated from low-lying areas in eastern Cuba, and state television showed muddy, waist-high water damaging homes. The Cayman Islands ordered citizens to secure loose materials in their yards to prevent them from becoming missiles in high winds, and told them to stock up on food, medicine and fuel for generators.

In the Dominican Republic, a mother's screams and the roar of falling earth jolted a Santo Domingo shantytown from its sleep Tuesday. Marcelina Feliz and six of her seven children _ ranging in age from 11 months to 15 years _ were killed when a landslide crushed their tin-roofed house.

Feliz, 32, was found hugging the body of her smallest child, rescue officials said. A neighbor was also killed.

"I don't know how I can live now, because none of my family is left," said Marino Borges, Feliz's husband and father of several of her children.

A new tropical depression formed in the Atlantic, and the hurricane center said it could become a tropical storm Thursday or Friday.

It had maximum sustained winds near 35 mph (55 kph) and was centered about 355 miles (575 kilometers) east-northeast of the northern Leeward Islands, moving toward the west-northwest near 5 mph (8 kph).