* Oil hovers around $142, still up almost 50 percent in 2008
* Iran vows to pursue its uranium enrichment work
* Hurricane Bertha unlikely to damage U.S. oil facilities
(Changes date line to New York from London, updates prices,
recasts)
NEW YORK, July 7 (Reuters) - Oil dropped around $3 a barrel
on Monday on profit-taking and signals that Iran will be more
flexible in negotiations over its nuclear program.
Oil received additional pressure from news Hurricane Bertha
will likely avoid damaging Gulf of Mexico energy facilities.
U.S. crude traded at $142.03 barrel, down $3.27 by 1739
GMT, below Friday's intraday low of $143.22. Brent crude fell
$1.72 to $142.70.
The New York Mercantile Exchange did not issue an official
Friday closing price due to the July 4 holiday.
"Crude prices are down on profit-taking as the fears that
brought prices up before the July 4th holiday didn't
materialize -- there was no attack on Iran and the storm Bertha
does not appear to be a threat to oil production," said Phil
Flynn, an analyst with Alaron Trading in Chicago.
Oil hit a record $145.85 on Thursday, but later eased as
traders anticipated lessening tensions between Iran and the
West after Tehran responded to a package of incentives to try
to resolve the dispute.
Tehran's foreign minister on Sunday expressed optimism
about what he said was a "new environment" for talks.
"Iran shows signs of improved lines of communication," said
Barclays Capital in a report.
But Iranian President Mahmoud Ahmadinejad said on Monday
Iran would not abandon its right to enrich uranium and rejected
a major powers' demand to do so as "illegitimate," the official
IRNA news agency reported.
Earlier on Monday, oil prices were boosted by a gain in the
dollar, which reached a one-week high against a basket of major
currencies earlier Monday, benefiting from a European Central
Bank tone that has reduced expectations of further interest
rate rises.
Strength in the U.S. dollar can reduce the appeal of oil
and other commodities to investors as a hedge against
inflation.
Oil has gained almost 50 percent this year, driven partly
by tension over Iran's nuclear program and expectations that
global supply will fail to keep pace with demand from fast
growing Asian economies such as China.
The rally has led to fuel protests worldwide and begun to
dampen demand in some consumer nations, including the United
States, the world's biggest energy user. World leaders are
concerned prices could move even higher.
Leaders of the Group of Eight nations gathering for a
summit in Japan fear further rises, Italian Prime Minister
Silvio Berlusconi said.
"There are fears oil prices could increase further. Some
people fear they could reach $200," Berlusconi told reporters
on the sidelines of the summit.
(Reporting by Rebekah Kebede and Gene Ramos in New York, Alex
Lawler in London and Fayen Wongin in Perth; Editing by
Christian Wiessner)
(rebekah.kebede@thomsonreuters.com; +1 646 223 6057; Reuters
Messaging: rebekah.kebede.reuters@reuters.net))
