Dolly downgraded to tropical storm in South Texas

In its 5 a.m. EDT (10 a.m. British time) advisory, NHC saidDolly was located about 95 miles (155 km) northwest ofBrownsville, moving west-northwest at 7 miles per hour withwinds down to 60 mph.

Dolly was expected to weaken as it moved further inland,dumping up to 12 inches of rain and causing widespreadflooding.

Energy traders closely watch storms that enter the Gulf ofMexico and threaten U.S. oil and gas production facilities.

Dolly strengthened into a category two hurricane with windsof 100 mph before hitting the South Texas coast Wednesdayafternoon. But its track was too far south to damage or disruptGulf of Mexico gas supplies.

Several oil and gas producers evacuated some staff fromoffshore Gulf platforms as a precaution against the storm, butthe reported impact on production was minimal.

The U.S. Minerals Management Service said Wednesday thatDolly had forced producers to shut in nearly 5 percent of Gulfoil output, or about 58,000 barrels per day, and about 8percent of gas output, or 606 million cubic feet per day.

So far this week, producers shut in a total of about 1billion cubic feet of natural gas output due to the storm.

Commodities traders also watch storms that could hitagriculture crops like cotton in Texas and citrus in Florida.

An intermediate advisory will be issued by the NHC at 8a.m.

(Reporting by Joe Silha, editing by John Picinich)