Tropical Storm Gustav dumps rain on Haiti

(Updates position)

By Joseph Guyler Delva

PORT-AU-PRINCE, Aug 27 (Reuters) - Tropical Storm Gustav stalled over Haiti on Wednesday, dumping torrential rains on the impoverished country, and forecasters warned it could regain hurricane strength once it moves out to sea.

The seventh storm of the 2008 Atlantic season barged ashore in southern Haiti 10 miles (16 km) west of Jacmel on Tuesday with top sustained winds of 90 miles per hour (145 km per hour), a Category 1 hurricane on the five-step Saffir-Simpson intensity scale, the U.S. National Hurricane Center said.

But in its latest advisory, the Miami-based center said Gustav weakened once it hit land. The storm's top winds dropped to near 60 mph (95 kph), below the threshold for hurricanes, as it moved over rugged mountains late on Tuesday.

"Slow strengthening is forecast and Gustav could regain hurricane strength on Thursday once it moves away from Haiti," forecasters said. "Gustav should pass between Jamaica and the southeastern coast of Cuba" on Thursday, the hurricane center said.

Forecasters warned that heavy rains could cause life-threatening flash floods and mudslides. Gustav was expected to dump 6 to 12 inches (15 to 30 cm) of rain over Hispaniola, eastern Cuba, Jamaica and the Cayman Islands. Up to 25 inches (63 cm) of rain was possible in some isolated areas, the center said.

Haitian civil protection chief Alta Jean-Baptiste said two people were believed killed and five injured in a landslide in a town near Jacmel, but there were no other immediate reports of serious damage as of late Tuesday.

Gustav could become the first major storm to threaten U.S. oil and gas production in the Gulf of Mexico since 2005.

U.S. crude CLc1 settled up $1.16 at $116.27 a barrel on Tuesday, while London crude traded up 60 cents to $114.63, as traders grew concerned about the storm's potential threat to offshore oil platforms and pipelines in the Gulf of Mexico.

Most computer models used to predict hurricane tracks showed Gustav headed toward Louisiana and Texas, where rigs produce a quarter of U.S. crude oil and 15 percent of its natural gas and which were slammed by the devastating hurricanes Katrina and Rita three years ago.

WILL REGAIN STRENGTH

If Gustav becomes a Category 3 or higher as it churns westward south of Cuba over deep, warm waters that provide tropical cyclones with fuel, it would be the first since Hurricane Wilma of 2005.

"If Gustav is able to thread the needle, passing through the Yucatan Channel into the Gulf of Mexico, it could intensify to Category 4 or 5 strength over the warm water in the Gulf," private forecaster AccuWeather said.

Oil companies began preparations. The largest producer in the region, Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research, Stock Buzz), said it would begin evacuating personnel from rigs on Wednesday.

At 5 a.m. (0600 GMT on Wednesday), the center of the storm was 80 miles (125 km) west of Port-au-Prince, and about 155 miles (250 km) southeast of Guantanamo, Cuba. It was moving west-northwest at 5 mph (7 kph).

Katrina, a monstrous Category 5 hurricane in the Gulf before it came ashore as a Category 3, killed 1,500 people on the U.S. Gulf coast and devastated New Orleans, while Rita, knocked out a quarter of U.S. fuel production in 2005.

Oil prices soared to what were then record levels as the hurricanes wrecked production platforms and offshore pipelines and battered several major oil refineries.

Gustav's immediate threat to Haiti's 9 million people was heavy rainfall. Haiti is vulnerable to deadly mudslides and flash floods because its hillsides have been stripped of trees by residents who use the wood as cooking fuel.

In 2004, Tropical Storm Jeanne was blamed for flooding that killed around 3,000 people, while spring floods that year killed another 2,000 Haitians.

Tropical storm alerts were in effect as of Wednesday morning for parts of Haiti, Cuba and Jamaica. A hurricane watch was in effect for parts of Cuba and the entire Cayman Islands. (Additional reporting by Robert Campbell in New York and Erwin Seba in Houston; Writing by Tom Brown; Editing by Michael Christie)