Katia, which had become the Atlantic's second named hurricane of the season Wednesday night, weakened back to a tropical storm Thursday afternoon, but forecasters said it should restrengthen and eventually become a major hurricane with winds above 110 mph.
Also becoming a concern was a thunderstorm cluster in the Gulf of Mexico, which could dump up to 20 inches of rain along the gulf.
At 5 p.m. ET, Katia had maximum sustained winds near 70 mph, 5 mph less than when it became a hurricane.
The U.S. National Hurricane Center in Miami said it should regroup and that its forecast "still brings Katia to a major hurricane in a few days."
Jack Beven, a specialist at the hurricane center, earlier said it's too early to tell if Katia will hit land, where parts of the East Coast are still recovering from Hurricane Irene.
Katia was moving rapidly west-northwest in the open Atlantic and was forecast to turn northwest in a couple of days on a course that would keep it away from the Caribbean islands.
No coastal watches or warnings were in effect.
Don't stress yet, say forecasters
The National Hurricane Center cautioned the public — still recovering along parts of the East Coast from Irene — not to stress over the storm yet, even though it's over warm waters and in a low wind shear environment, two ingredients that could propel it to become a major hurricane.
"It's got a lot of ocean to go. There's no way at this point to say if it will make any impacts, let alone when it might make them," said NHC spokesman Dennis Feltgen. "There's a reason we don't do forecasts more than five days in advance — the information just isn't good. The error beyond that just isn't acceptable."
Hurricane Irene rampaged up the East Coast over the weekend and authorities on the U.S. Atlantic seaboard are keeping an eye on Katia to see which path it takes.
The Atlantic hurricane season typically brings 11 or 12 named storms. Katia is already the 11th storm, and with half of the season still ahead it is shaping up to be the unusually busy year that was predicted.
The storm's name replaces Katrina in the rotating storm roster because of the catastrophic damage from the 2005 storm that devastated New Orleans and the coast.