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Hours after forecasters upgraded the storm back to hurricane status Gustav continued to strengthen, with its top sustained winds measuring up to 130 km/h.

As of 8 p.m. ET the hurricane was moving northwest and about 40 km south of the islands of Little Cayman and Cayman Brac.

The upgrade came a day after Gustav slammed into southern Jamaica, killing four people and raising the death toll to 71.

Ken Reeves of AccuWeather.com told Â鶹ӰÊÓnet on Friday that there is an increasing chance that Gustav will make landfall near New Orleans and it will be powerful when it does.

"There is a possibility when it does move out into the Gulf of Mexico it could be as strong as as a (Category) four or five; now that's very similar to what we saw with Rita and Katrina and certainly will raise grave concerns along coastal communities."

Reeves said the storm would be slightly weaker on land, at about a Category three, but would still pack quite a punch.

Texas and Louisiana have put their national guards on standby. It was only three years ago that Hurricane Katrina struck, and New Orleans officials said they may need to evacuate residents ahead of Gustav's expected arrival, which could be as soon as Monday.

At least 59 Haitians died from floods, mudslides, and falling trees following Gustav's arrival on land Tuesday. Eight people died when a cliff collapsed in the Dominican Republic due to the bad weather.

Ronald Jackson of Jamaica's office of emergency preparedness told Canada AM that officials started making preparations early to prepare for the storm.

"We had people on the ground working with the communities to try to get people into the emergency shelters ahead of time," he said.

"We launched an aggressive public information campaign, so people took the storm seriously."

Gustav appeared to be heading towards the Grand Cayman Islands on Friday morning. One of the owners of the Grand Caymanian Resort told The Associated Press, the storm may not be as bad as Hurricane Ivan.

"Whatever was going to blow away has already blown away," Theresa Foster said.

Ivan destroyed about 70 per cent of the buildings when it struck four years ago. In New Orleans and Louisiana residents couldn't help but think of Hurricane Katrina.

"I'm panicking," said Evelyn Fuselier, whose home was covered by four metres of Katrina floodwaters.

"I keep thinking, 'Did the Corps fix the levees? Is my house going to flood again?' ... 'Am I going to have to go through all this again?'"

Gustav may also have wide-ranging economic repercussions. Fears that the storm may affect oil production in the Gulf area pushed oil prices above the US$120 a barrel before they settled back to $116.

"Prices are going to go up pretty soon. You're going to see increases by five, 10, 15 cents a gallon," Tom Kloza, publisher of the Oil Price Information Service, told AP.

"If we have a Katrina-type event, you're talking about gas prices going up another 30 percent."

With files from The Associated Press