As the system swirled yesterday, about 240 miles (385 kilometres) south-southwest of the mouth of the Mississippi River, authorities urged residents to stock up on essentials.
Florida Governor Rick Scott declared a state of emergency in 18 counties to enable the potential deployment of resources as needed.
"Our number one priority is the safety of our citizens," he said in a statement.
A hurricane watch that could be downgraded was in effect from Grand Isle, Louisiana, to west of Destin, Florida, according to the National Hurricane Center.
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A tropical storm warning was in effect for a stretch along the Louisiana coast.
Karen's centre was expected to be near the coast tonight.
Set to become the first named system to strike the United States this year, Karen was packing maximum sustained winds of near 50 mph at 2330 IST.
"Little change in strength is expected during the next day or so with some strengthening possible Saturday night and Sunday," the Miami-based NHC said.
"The combination of storm surge and the tide will cause normally dry areas near the coast to be flooded by rising waters."
Oil prices rose yesterday on falling production as companies evacuated staff from sensitive refining and production areas along the Gulf Coast.
The main US contract, West Texas Intermediate for delivery in November, closed at USD 103.84 a barrel on the New York Mercantile Exchange, up 53 cents from Thursday's closing level.
On Thursday, President Barack Obama was briefed on disaster preparations and his administration recalled emergency workers who had been told to stay home due to a government shutdown linked to a bitter budget dispute.
"We will not let the government shutdown in Washington in any way hurt our emergency response efforts in Florida," he said.