Tropical depression likely in Caribbean

NEW YORK (Reuters) - A tropical disturbance over the western Caribbean Sea strengthened further on Friday, the U.S. National Hurricane Center said, giving it a high 80 percent chance of developing into a tropical depression later in the day or Saturday.

It was projected to cross Mexico's Yucatan Peninsula over the next day or two. After that, weather models are divided on whether the system will turn northwest toward Mexico, northeast toward the Florida Panhandle or north toward the central Gulf where BP Plc is trying to clean up its massive oil spill.

The Coast Guard said it would be necessary to shut down operations involved in the oil-siphoning efforts at BP Plc's well five days before gasle force winds hit operations.

The U.S. National Weather Service defines gale force winds as 39 mph to 54 mph. During a briefing on the spill, Coast Guard Admiral Thad Allen mentioned "about 40 knots," which is 46 mph.

If a storm does form, it will be named Alex.

Earlier Friday, the NHC said the system, located between Honduras and the Cayman Islands, had a 70 percent chance of developing into a depression.

An Air Force Reconnaissance plane was approaching the system to determine if a tropical depression had formed, the NHC said, adding, "Upper-level winds are becoming more conducive for development."

Separately, the NHC pointed to another large but disorganized area of showers just east of the northern Leeward Islands in the eastern Caribbean associated with a tropical wave. But the Center gave this system a low 20 percent chance of developing over the next day or two, up from a projection earlier Friday of just 10 percent.

Energy traders keep a close eye on storms that could enter the Gulf of Mexico and disrupt offshore U.S. oil and natural gas production or refinery operations along the coast.

Commodities traders likewise watch storms that could damage agriculture crops, such as citrus and cotton in Florida and other states along the coast to Texas.

Pricing of insurance-linked securities, which transfer insurance risks associated with natural disasters to capital markets investors and can be used to hedge other weather risk exposures, can also be affected by the path of a storm.

(Reporting by Scott DiSavino; Editing by David Gregorio)