NEW YORK (Reuters) - Crude oil prices rose and gasoline fell about 3 percent on Tuesday as the gradual restart of refineries in the U.S. Gulf that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch.

FILE PHOTO - Vehicles line up for gasoline at the Fuel City service station in the aftermath of Hurricane Harvey, in Dallas, Texas, U.S., September 1, 2017. REUTERS/Brandon Wade

Texas was edging towards recovery from the devastation of Harvey that hit its coast late on Aug. 25, as shipping channels, oil pipelines and refineries restarted some operations. At its peak, the hurricane knocked out almost a quarter of all U.S. refining capacity.

“This is kind of a boomerang,” said John Kilduff, partner at energy hedge fund Again Capital, noting that just after the storm, the fear was gasoline shortages. “Today, there’s a bit of a worry in the short term that there could be an issue around crude supply.”

Eight U.S. oil refineries with 2.1 million barrels per day of refining capacity, or 11.4 percent of the U.S. total, were shut as of Monday afternoon, the Department of Energy said.

U.S. gasoline futures RBc1 dropped around 3 percent from their last close, to $1.69 per gallon and were down from $2.17 on Aug. 31 and back to levels last seen before Harvey hit the U.S. Gulf Coast and its large refining industry.

U.S. West Texas Intermediate crude futures Clc1 jumped $1.54 to $48.83 per barrel by 11:37 a.m. EDT (1537 GMT) , their highest levels in two weeks.

Brent crude LCOc1 was trading $1.13, or more than 2 percent higher at $53.47 a barrel.

Signals that the Organization of the Petroleum Exporting Countries could extend its output limits beyond the first quarter of 2018 also boosted prices, as did a weak U.S. dollar .DXY.

But another hurricane - Irma - strengthened on Tuesday into a Category 5 hurricane, the most powerful storm on the Saffir-Simpson scale with sustained winds of over 157 miles (253 km)per hour.

The U.S. National Hurricane Center’s forecast path for the storm has Irma passing south of Florida on Sunday on its way into the Gulf of Mexico.

Again Capital’s Kilduff said worries that Irma could veer into the U.S. oil and gas platforms in the Gulf, also underpinned prices, though the NHC said it is too early to determine the direct impacts Irma might have.

September is typically the peak of the hurricane season. Another storm is developing behind Irma in the Atlantic, and an area of bad weather in the southwest Gulf of Mexico threatens to become a tropical storm in the next two days