Aug. 27 (Bloomberg) -- Tropical Storm Gustav drenched Haiti today and menaced Cuba, Jamaica and the Cayman Islands, while setting a likely course for the U.S. Gulf Coast region devastated by Hurricane Katrina three years ago.

Gustav, which weakened from a hurricane overnight as it passed over Haiti, is forecast to regain steam over the Caribbean and may intensify into a Category 3 hurricane or stronger as it enters the Gulf of Mexico by the weekend, the U.S. government projects. Crude rose as the storm was forecast to hit the Gulf's oil-producing region.

``This storm remains likely to explode into a major hurricane over the northwestern Caribbean'' on Aug. 29, said Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Wayne, Pennsylvania.

Gustav, packing sustained winds of almost 60 miles (95 kilometers) per hour, was about 110 miles west of the Haitian capital, Port-au-Prince, and 125 miles southeast of Guantanamo, Cuba, just before 11 a.m. Miami time, the U.S. National Hurricane Center said in an advisory.

Gustav, moving west-northwest at about 5 mph, should pass between Jamaica and Cuba sometime tomorrow, the advisory said.

As much as 25 inches (64 centimeters) of rain may fall in parts of the Dominican Republic, Haiti, eastern Cuba, Jamaica and the Caymans, the center said.

`Business as Usual'

``They're getting tremendous rains in Haiti and there will be mudslides and flash flooding,'' said AccuWeather Inc. meteorologist Paul Walker. ``It's going to continue moving to the northwest, and I'd imagine they're going to have to shut down the oil rigs and refineries.''

Executives of local hotels have met to discuss contingency plans, said Kelly Schulz, vice president for communications at the New Orleans Convention and Visitors Bureau.

``At this point, we're business as usual,'' Schultz said.

New Orleans Mayor Ray Nagin said he'll leave the Democratic National Convention in Denver today to head home and manage preparation for the storm, the Times-Picayune of New Orleans reported. Louisiana Governor Bobby Jindal said yesterday he'll skip next week's Republican convention if Gustav threatens the state, the Associated Press reported.

New Orleans is planning a commemoration on Aug. 29 of the third anniversary of Hurricane Katrina, which struck on that date in 2005.

Caribbean Deaths

The storm killed at least eight people in Haiti, according to Agence France-Presse. In the Dominican Republic, eight members of one family died because of a landslide, the Associated Press reported.

The storm is forecast to pass over the Caribbean between Cuba and Jamaica, before entering the Gulf as soon as Aug. 30. Gustav may gain ``major'' hurricane status, reaching at least Category 3 on the five-step Saffir-Simpson scale of intensity, the center said.

``The upper Texas coastline to Louisiana remain most at risk,'' Rouiller said. ``The entirety of the Gulf energy production region remains under the gun and I expect somewhere near 85 percent of the Gulf energy infrastructure will be shut- in,'' meaning sealed off.

In August and September 2005, U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf coast. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.

Oil Climbs

The hurricane center's track for Gustav takes it toward waters south of Louisiana, where U.S. oil and gas platforms and pipelines are most concentrated. Offshore fields in the Gulf accounted for 26 percent of total U.S. crude production and 12 percent of natural gas output in April, according to the U.S. Energy Department.

Louisiana has 19 oil refineries, which together process almost 3 million barrels a day. Those closest to the coast include ConocoPhillips' Belle Chasse refinery, Petroleos de Venezuela SA's Chalmette plant and several refineries clustered near Lake Charles.

Crude oil for October delivery rose $2.48, or 2.1 percent, to $118.75 a barrel on the New York Mercantile Exchange. Prices are up about 60 percent from a year ago.

Tropical-storm warnings were in place across southern Haiti and in Jamaica. The Cuban provinces of Guantanamo, Santiago de Cuba and Granma were under a hurricane warning, and hurricane watches were in force in other parts of Cuba and in the Cayman Islands.

Category 3

``Right now we're forecasting Category 3, and one category higher or lower is not out of the question,'' Eric Blake, a meteorologist at the hurricane center, said today in a phone interview.

Category 3 storms have sustained winds of at least 111 mph, and Category 4 hurricanes blow at a minimum of 131 mph.

In Jamaica, the government began to prepare 140 shelters as Gustav advanced, the Office of Disaster Preparedness and Emergency Management said in an e-mailed statement.

Cuban authorities inspected dams and reservoirs to assess whether they can cope with the expected rainfall brought on by the storm, the official Cuban News Agency said. In Granma province, the Provincial Defense Council ordered the evacuation of people from low-lying areas, and supplies of rice, cement and fertilizer were moved out of the reach of potential floodwaters, the agency reported.

To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net

Last Updated: August 27, 2008 13:29 EDT