March 28 (Bloomberg) -- Crude oil fell in New York, snapping a three-day gain, as concern over supply disruptions from Iraq eased after a pipeline fire was extinguished.

Iraqi Prime Minister Nuri al-Maliki pledged to maintain a crackdown on Shiite militias in the southern city of Basra that has sparked violence and protests across the country. Oil gained 1.6 percent yesterday after the blast on the Zubair-1 pipeline, one of two that transport oil to the Basra terminal.

``We are entering the low-demand season in the next quarter,'' said Anthony Nunan, the assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``While it's not a simple situation, the market has enough supplies and if needed, the Saudis can step in.''

Crude oil for May delivery fell as much as $1.29, or 1.2 percent, to $106.29 a barrel, and traded at $106.57 at 1:28 p.m. Singapore time in after-hours trading on the New York Mercantile Exchange. Futures are up 67 percent from a year ago.

Iraq's oil exports are expected to return to normal, an Iraqi Oil Ministry official said yesterday. The fire at the pipeline was put out before midday local time yesterday and the damage is being assessed, said the official in Baghdad, who declined to be identified because of security reasons.

The Organization of Petroleum Exporting Countries has more than 3 million barrels a day of spare crude oil available after agreeing to keep output unchanged on Feb. 1, the International Energy Agency said on Feb. 13.

Spare Capacity

Saudi Arabia holds 1.75 million barrels a day of spare volumes, Nigeria 410,000 barrels a day and the United Arab Emirates 260,000 barrels a day, the IEA said at the time.

Saudi Arabia is the world's biggest oil-producing country, with output of 9.2 million barrels a day in February, according to Bloomberg estimates.

Brent crude for May settlement fell as much as 90 cents, or 0.9 percent, to $104.10 a barrel on London's ICE Futures Europe exchange at 12:55 p.m. in Singapore. Yesterday, the contract closed at $105 a barrel. Brent crude futures reached a record $107.97 a barrel on March 17.

Refiners schedule repairs and upgrades at this time of year, when crude-oil use typically falls in the U.S., Asia and Europe as U.S. heating-fuel demand slows and before warmer weather spurs an increase in gasoline consumption.

U.S. refineries operated at 82.2 percent of capacity, the lowest since October 2005, cutting fuel stockpiles, in the week ended March 21, according to Energy Department data on March 26.

While shutting plants for scheduled maintenance, some refiners had lowered operating rates because of a decline in refining margins.

Earlier this week, Alon USA Energy Inc. said it was shutting two crude units for 24-hours at its refinery in Paramount, California, for planned maintenance. Last month, the company shut two units at its Long Beach refinery until margins improve.

Valero Energy Corp., the biggest U.S. refiner, has reduced output from its fluid catalytic cracking units, the primary gasoline-making devices at its 15 U.S. refineries, to 73 percent because of ``uneconomic'' processing margins, the San Antonio- based company said on March 26.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net.

Last Updated: March 28, 2008 01:39 EDT