Oil falls below $144

Oil dropped below $144 a barrel today but was still within sight of record highs

Oil dropped below $144 a barrel today but was still within sight of record highs reached in the previous session when traders bought into the market ahead of a holiday weekend in the United States (US).

US crude oil was down $1.44 at $143.85 a barrel by 1700 GMT, below an all-time high of $145.85 hit on Thursday. The contract has risen more than 50% this year.

London Brent was down $1.66 at $144.42.

Prices fell more than a dollar after Iran said it would make a response later today to proposals from six world powers to try to resolve a long-running dispute over its nuclear development programme.

The United States, China, Russia, Germany, Britain and France have offered trade and other incentives to Iran, which is facing sanctions because it has refused to give up its nuclear programme.

Pre-holiday rush
Investors had rushed into crude oil ahead of the US Independence Day holiday today, July 4 because they were wary of any escalation in tensions between Iran and Israel that have contributed to oil's rise to a record of $145.85 this week.

The price spike has caused fuel protests worldwide and has begun to dampen demand in consuming nations, including the United States, the world's biggest energy consumer.

The next milestone is $150 a barrel, which some analysts had predicted the market could reach by July 4.

Investment flows into oil have contributed to the price surge, encouraged by commodities' strong returns this year versus a feeble showing from equities.

The weak US dollar has also played a part in boosting oil, which is priced in the US currency.

The dollar drew some support today after European Central Bank President Jean-Claude Trichet appeared to play down chances of further interest rate rises. – Reuters