Tropical Storm Gustav nears hurricane strength Meanwhile, Hanna becomes the eighth named storm of the season

By MarketWatch
Last update: 5:09 p.m. EDT Aug. 28, 2008Comments: 49SAN FRANCISCO (MarketWatch) -- Tropical Storm Gustav neared hurricane strength early Thursday evening as it moved across Jamaica, and Tropical Storm Hanna became the eighth tropical storm of the Atlantic hurricane season.
Energy traders are keeping a watchful eye on Gustav's projected path, as the Gulf of Mexico is home to about a quarter of U.S. oil production, according to Reuters.
October crude fell $2.56 to close at $115.59 a barrel on the New York Mercantile Exchange, retreating from a high of $119.30 after climbing 3% during a three-session winning streak. See Futures Movers.
In an advisory posted at 5 p.m. EDT, the National Hurricane Center reported that Gustav's center was about 15 miles east-northeast of Kingston, Jamaica.
The NHC expected Gustav to strengthen on Friday and Saturday and said it may become a hurricane again by Friday.
Gustav's maximum sustained winds remained near 70 miles an hour, compared with the 45 mph winds reported Wednesday night. A Category 1 hurricane has wind speeds of 74 to 95 mph.
Forecasters warned of potential flash floods and mudslides with Gustav expected to produce 6 to 12 inches of rain across Jamaica and the Cayman Islands.
A hurricane warning remains in effect for Jamaica, while a hurricane watch was in effect for the Cayman Islands and parts of Cuba.
Tropical Storm Hanna, with winds near 40 mph, was officially named Thursday morning and will likely see little change in strength over the next 24 hours, according to the hurricane center. It's currently about 260 miles northeast of the Northern Leeward Islands.
Hanna is expected to turn toward the northwest later Thursday or Friday and to be centered well to the northeast of the Bahamas during the next couple of days, the NHC said.
Flooding caused by Gustav killed 14 people on Haiti's southern peninsula and triggered landslides in the Dominican Republic that buried eight people, the Associated Press reported.
Gustav could become the first major hurricane in the Gulf since Wilma during the historic 2005 hurricane season, according to AccuWeather.com.
"There is nothing in Gustav's path that will hinder development," said John Kocet, senior meteorologist with AccuWeather.com. "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."
Louisiana Gov. Bobby Jindal declared a state of emergency on Wednesday ahead of the storm and urged residents to prepare for the worst.
"We are continuing to monitor this storm as state government agencies, including the State Police and the Louisiana National Guard, have been put on standby so we are ready to quickly respond if the storm heads our direction," he said.
Meanwhile, the Republican Party may hold off on its national convention next week if Tropical Storm Gustav turns into a hurricane and strikes the Gulf Coast, a spokesman for presumptive presidential nominee John McCain said Thursday. See full story.
Friday marks the three-year anniversary of Hurricane Katrina's landfall along the Gulf Coast.