(Updates storm speed, location, adds details on Mexico, Cristobal storm)

By Chris Baltimore

HOUSTON, July 22 (Reuters) - Tropical Storm Dolly intensified over the western Gulf of Mexico on Tuesday as it bore down on southern Texas, but forecasters don't expect it to pack too much of a punch when it comes ashore near the Mexican border as a hurricane on Wednesday.

The storm, with sustained winds of nearly 70 miles per hour (110 km per hour), was nearing hurricane strength, and the U.S. National Hurricane Center issued a hurricane watch for the southern Texas coast as far north as Corpus Christi.

At 2 p.m. EDT (1800 GMT), Dolly was 195 miles (310 km) southeast of the border town of Brownsville, Texas, where it was due to come ashore on Wednesday as a low-grade hurricane.

The storm's predicted landfall and strength are unlikely to jeopardize sensitive offshore drilling rigs and production platforms in the U.S. and Mexican waters of the Gulf of Mexico. U.S. crude oil prices on Tuesday fell over $4 a barrel.

The United States has largely escaped the past two Atlantic hurricane seasons, with just one hurricane -- Humberto in November 2007 -- making landfall on its coasts.

But it was pummeled in 2004 and 2005, when a series of powerful hurricanes, including the catastrophic Katrina, ravaged Florida and the U.S. Gulf Coast.

The National Hurricane Center said Dolly is unlikely to become a major hurricane prior to landfall, but could dump as much as 15 inches (38 cm) of rain on South Texas and northeastern Mexico in coming days.

AHEAD OF SCHEDULE

The 2008 Atlantic hurricane season is already a month ahead of schedule, but is unlikely to see a repeat of the devastating 2005 season. On average, the fourth tropical storm of the six-month season does not occur until Aug. 29. Dolly, this year's fourth, formed on July 20.

"It absolutely does mean something, and we should be looking at it with trepidation," said Jeff Masters, co-founder of meteorological website The Weatherunderground.

In Texas, Gov. Rick Perry put 1,200 National Guard troops on alert, and told citizens to take precautions, although no mandatory evacuations were ordered.

"We want the citizens to get out their plan, make the decisions on when they're going to go, where they're going to go, but get your batteries and everything stocked up, get your cars full of gasoline," said Henry Garrett, mayor of the coastal city of Corpus Christi.

At Mexico's Playa Bagdad beach, 24 miles (38 km) east of the border city of Matamoros, tourists swam and drank beer on Tuesday as restaurant owners packed up furniture in anticipation of the storm.

"This happens all the time. There's no reason to be frightened," fisherman Carlos Robles said as he worked on his nets.

Meanwhile, Tropical Storm Cristobal strengthened on Tuesday as it sped away from the U.S. East Coast but forecasters said it was likely a "last hurrah" before the third named storm of the 2008 hurricane season faded over cool Atlantic waters.

By 11 a.m. EDT (1500 GMT) Cristobal was around 280 miles (450 km) south-southwest of Halifax, Nova Scotia, and moving northeast over open waters at a brisk 25 miles per hour (41 km per hour), the Hurricane Center said.

Top sustained winds had increased to 65 mph (100 kph).

(Reporting by Chris Baltimore in Houston, Jim Forsyth in San Antonio, Michael Christie in Miami and Tomas Bravo in Matamoros, Mexico; editing by Patricia Zengerle)

(For latest U.S. National Hurricane Center reports, see http://www.nhc.noaa.gov/)

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