Rain started to fall along the Gulf Coast as Hurricane Dolly — upgraded in force from a tropical storm — closed in on towns straddling the Mexico-Texas border.
The Category 1 hurricane was expected to strengthen slightly before making landfall Wednesday and bringing with it up to 15 inches of rain.
Dolly was upgraded from a tropical storm Tuesday afternoon, and sustained winds have strengthened to about 85 mph. At 5 a.m. EDT Wednesday, the storm's center was about 65 miles east-southeast of Brownsville, moving northwest at about 8 mph.
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A hurricane warning was in effect for the coast of Texas from Brownsville to Corpus Christi and in Mexico from Rio San Fernando northward.
Crude oil fell more than $3 a barrel, dropping to a six-week low, on forecasts a hurricane in the Gulf of Mexico will miss oil installations. Also, the dollar gained versus the euro, reducing the appeal of commodities.Boston Globe
Oil dropped below $126 a barrel, down more than $21 from a record $147.27 on July 11, as Hurricane Dolly moved toward the Texas border with Mexico. The dollar rose on signs that US interest rates may increase. Senate Democrats yesterday cleared the first hurdle for legislation that aims to curb speculation in energy markets.
"There are dual causes to today's move lower," said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Ky. "There's a strong move by the dollar, which always puts pressure on energy prices. We aren't worried about Dolly anymore, also putting pressure on prices."
Crude oil for August delivery fell $3.09, or 2.4 percent, to settle at $127.95 a barrel on the New York Mercantile Exchange, the lowest settlement price since June 5. Futures are up 69 percent from a year ago. The August contract expired yesterday. The more-active September contract declined $3.40, or 2.6 percent, to settle at $128.42 a barrel.