Oil falls below $144 as Iran responds to nuclear offer

By Jane Merriman

LONDON (Reuters) - Oil dropped below $144 a barrel on Friday, 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.

U.S. crude oil was down $1.44 at $143.85 a barrel by 1:00 p.m. EDT, below an all-time high of $145.85 hit on Thursday. The contract has risen more than 50 percent 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 on Friday to proposals from six world powers to try to resolve a long-running dispute over its nuclear development program.

Iran subsequently handed its response to European Union foreign policy chief Javier Solana, but did not give any details about its content.

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 program.

PRE-HOLIDAY RUSH

Investors had rushed into crude oil ahead of the U.S. independence day holiday on 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.  Continued...