Aug. 20 (Bloomberg) -- Hurricane Bill’s strength see-sawed today as it headed northwest in the Atlantic, while its most powerful winds extended their reach from the storm’s center about 550 miles south of Bermuda, government forecasters said.

Bill’s maximum sustained winds were at Category 3 intensity of 125 mph (201 kph) just before 8 p.m. Miami time, up from 120 at midday and down from 135 mph yesterday, the U.S. National Hurricane Center said. It is forecast to return to Category 4 status tomorrow or the next day as it moves toward Canada.

Hurricane-strength winds, which start at 74 mph, reached 115 miles from the eye, growing from 85 miles earlier today, the center said in an advisory. Tropical storm-force winds, which begin at 39 mph, reached as far as 260 miles from the center, greater than the distance from Boston to New York City.

Bill is a “large and dangerous” storm creating high swells in the western Atlantic, the bulletin said.

Bill, which had been a Category 4 on the five-step Saffir- Simpson scale of intensity, is moving northwest at 18 mph, the center said. The storm’s track is expected to take it between Bermuda and the U.S. East Coast on Aug. 22 before it turns toward Canada’s Maritime provinces. Bill is forecast to hit Nova Scotia the next day while still at hurricane strength.

Strengthening Possible

“It is still going to go over some warm water and it could go back up to a Category 4,” said Dan Kottlowski, a meteorologist at AccuWeather.com in State College, Pennsylvania. “This could pose a threat to the New England coast.”

The hurricane center’s probability track shows Nantucket Island, off the coast of Massachusetts, at the edge of where the storm may be this weekend. There is a 20 percent to 30 percent chance Nantucket and Cape Cod will experience at least winds of 39 mph or more.

The latest computer models show the track to be slightly farther to the west than originally mapped, the center said.

“Large swells associated with Bill will be impacting the islands of the northeast Caribbean Sea, the Bahamas and Bermuda during the next day or two,” the statement said. “Large swells associated with Bill should also begin to affect portions of the East Coast of the United States Friday and Saturday.”

Making Waves

The storm produced waves of at least 38.7 feet (11.8 meters), according to a National Oceanic and Atmospheric Administration monitoring buoy. The storm may produce waves at its center at least 50 feet high by Aug. 22, according to models, Weather Underground’sJeff Masters wrote on his blog.

The Bermuda Weather Service issued a tropical storm warning, which means storm conditions may occur within 24 hours. The service issued a hurricane watch, which means hurricane conditions are possible within 36 hours, earlier in the day.

“South-facing shores will see gradually rising swells and surf today, with winds increasing through Friday to tropical storm-force Friday evening,” the Bermuda Weather Service said.

In Canada, some refineries in Nova Scotia and New Brunswick may be at risk, including privately held Irving Oil’s Saint John, New Brunswick, plant that processes about 300,000 barrels of oil a day, according to Olivier Jakob, an analyst with research group Petromatrix GmbH in Zug, Switzerland.

The Halifax Port Authority doesn’t expect Bill to interfere with regular ship traffic, said Michele Peveril, a spokeswoman for the port. Halifax is Canada’s third-largest port behind Vancouver and Montreal, and handles cargo and passenger traffic.

Canadian authorities started issuing bulletins on Bill today. No storm of Category 3 intensity or stronger has hit Canada since recordkeeping began in 1851, Peter Bowyer, a program supervisor for the Canadian Hurricane Centre in Dartmouth, Nova Scotia, said yesterday.

The 2009 hurricane season, which runs from June 1 to Nov. 30, got off to a quiet start before three named storms formed in a period of 48 hours Aug. 15 and 16. Tropical storms Ana and Claudette have since dissipated.

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

Last Updated: August 20, 2009 20:13 EDT