(Corrects spelling of Noble in 12th paragraph.)

Aug. 4 (Bloomberg) -- Tropical Storm Edouard churned west today over the Gulf of Mexico and is forecast to approach hurricane strength on a course for Galveston, Texas, the biggest U.S. petroleum port. Parts of Louisiana and Texas were under a hurricane watch.

Edouard had maximum sustained winds of 45 miles (75 kilometers) per hour as of 10 a.m. Houston time today, the National Hurricane Center in Miami said in an advisory on its Web site.

The system was 160 miles south-southeast of Lafayette, Louisiana, and 265 miles east-southeast of Galveston, moving west at about 8 mph, the agency said. The most likely track forecast by the center shows Edouard making landfall near Galveston early tomorrow.

The Houston Ship Channel, which serves Galveston, Houston and Texas City, was closed today because of the storm's approach. Crude oil fell, after rising for a second day as the storm threatened Gulf output.

``Some increase in strength is expected during the next 24 hours and Edouard could be nearing hurricane strength before reaching the coastline,'' the center said. Hurricanes have maximum sustained winds of at least 74 mph.

Edouard formed as a depression yesterday and quickly strengthened into a tropical storm, the fifth of the Atlantic hurricane season. The hurricane center said it could bring from 3 inches (7.6 centimeters) to 10 inches of rain in some areas.

Rig Fears Ease

``A lot of the fear about something really affecting those rigs appears to have slackened,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``The threat is that there's a large enough amount of rainfall that those refineries could be affected for a while.''

Crude oil for September delivery fell $1.35 to $123.75 a barrel as of 11:21 a.m. on the New York Mercantile Exchange. New York oil futures have slipped more than $21 a barrel, or 15 percent, from the record $147.27 on July 11 as U.S. gasoline demand slowed, and a stronger dollar reduced the attraction of commodities as an investment.

A tropical-storm warning, indicating winds of at least 39 mph are expected within a day, was in place from the mouth of the Mississippi River westward to Port O'Connor, Texas. A hurricane watch, meaning such conditions are possible within 36 hours, extended from Intracoastal City in Louisiana to Port O'Connor.

Strengthening Seen

``Current projections have Edouard making landfall as a strong tropical storm or potentially a Category 1 hurricane somewhere along the upper Texas Coast,'' the Galveston County Office of Emergency Management said on its Web site. ``If the storm remains on the current forecast track, the coast of Galveston County could begin to experience tropical storm-force winds in the early morning hours of Tuesday.''

The county advised residents to stock up on supplies, including drinking water, canned food, first aid items, flashlights, radios and whistles.

Noble Corp., the third-largest U.S. offshore oil driller, said it should have two jack-up rigs evacuated later today, said John Breed, a spokesman for the Houston-based company. The rigs are in shallow water off the coast of Louisiana.

Apache Corp., an exploration company, said it was halting some gas and oil production and evacuating 110 people from rigs.

Louisiana Port Closed

The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, closed late yesterday because of the storm. Known as the LOOP, the facility has the capacity to receive 1 million barrels of oil a day, or about 10 percent of U.S. imports.

The U.S. Gulf Coast produces about 1.3 million barrels a day of crude oil and 7.7 billion cubic feet of natural gas, according to the Interior Department's Minerals Management Service.

The hurricane center is also tracking a low-pressure system about 450 miles east-northeast of the Caribbean's northern Leeward Islands. It was moving west-northwest at 15 to 20 mph.

Hurricanes Katrina and Rita, which both reached Category 5 with wind speeds of more than 155 mph over the Gulf before hitting land as weaker storms, devastated New Orleans and the U.S. Gulf Coast's oil output and refineries in 2005, roiling oil and natural-gas markets. Category 5 is the highest on the Saffir- Simpson scale of hurricane intensity.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Brian K. Sullivan in Boston at bsullivan10@bloomberg.net.

Last Updated: August 4, 2008 15:06 EDT