March 31 (Bloomberg) -- Crude oil dropped from an eight-week high in New York after gasoline fell on speculation rising U.S. motor-fuel production will bolster stockpiles before demand peaks in the northern hemisphere summer.

April gasoline futures, which expire today, fell for the first time in more than a week. U.S. gasoline output rose to 8.3 million barrels a day last week as refiners brought more units back on line after seasonal maintenance, the U.S. Energy Department said March 29.

``We're actually in pretty good shape on gasoline production versus last year,'' said Chris Mennis, owner of oil broker New Wave Energy in Aptos, California. ``Our max gasoline production isn't usually reached until June or July'' so there is time to build supplies, he said.

Crude oil for May delivery fell as much as 47 cents, or 0.7 percent, to $66.68 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $66.71 a barrel at 10:08 a.m. London time.

Brent crude oil for May settlement added 9 cents, or 0.1 percent, to $66.55 a barrel on London's ICE Futures exchange.

``Brent is pushed up by geopolitical news from Iran and Nigeria,'' said Bruce Evers, an oil analyst Investec Securities Ltd. in London. ``There are concerns that Iran may play its oil card.''

Oil traders are concerned that Iran, the world's fourth- largest supplier, may cut crude exports in response to United Nations attempts at restricting the nuclear development program of the Islamic Republic.

Peaceful Purposes

Iran will continue developing plans for uranium enrichment, Aliasghar Soltanieh, Iran's ambassador to the United Nations-led International Atomic Energy Agency, said yesterday.

Iran must suspend nuclear fuel enrichment and prove that its atomic program is intended for ``exclusively'' peaceful purposes, the United Nations Security Council's five veto-wielding members said yesterday.

Today a magnitude 5.7 earthquake struck western Iran, the U.S. Geological Survey said on its Web site. The quake struck at 4:47 a.m. Iranian time, the USGS said. Its epicenter was about 45 kilometers (28 miles) northeast of Khorramabad, a city of more than 270,000 people, and was at a depth of 10 kilometers.

Dozens of people were killed, and more than 700 injured, IRNA, the Iranian news agency, said.

Price Surge

Gasoline prices have surged this month as refinery maintenance and rising demand cut U.S. stockpiles for four straight weeks, the Energy Department said March 29. Gasoline reached $2.0025 a gallon yesterday, the highest intraday price since Oct. 5, on concern new fuel standards may hamper efforts to build summer stockpiles.

The gasoline contact for April settlement fell as much as 3.32 cents, or 1.7 percent, to $1.9625 in New York. The more actively traded May contract fell 1.79 cents, or 0.9 percent, to $1.8922.

Yesterday, the New York crude oil contract for May delivery jumped 70 cents, or 1.1 percent, to $67.15, the highest close since Jan. 31. April gasoline rose 2.1 percent to $1.9957 a gallon, the highest close since Oct. 4, and took its six-day rally to 15 percent.

U.S. refiners are phasing out the additive MTBE, or methyl tertiary butyl ether, and are replacing it with fuel blended with ethanol in reformulated gasoline.

Ethanol can't be blended with gasoline at the refinery and must instead be shipped to regional terminals by rail or truck. That may lead to regional shortfalls, the U.S. Energy Department said last month.

April gasoline futures covering reformulated fuel to be blended for use with ethanol, known as RBOB, rose 0.5 cent to settle at $2.0805 a gallon in New York yesterday.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

Last Updated: March 31, 2006 04:11 EST