* U.S. crude settles over $141, up over 40 percent in 2008
* Iran expresses optimism for talks, but vows to pursue uranium
enrichment work
* Hurricane Bertha unlikely to damage U.S. oil facilities
(Updates with settlement prices)
NEW YORK, July 7 (Reuters) - Oil dropped over $4 a barrel 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 <CLc1> settled at $141.37 a barrel, down $3.92 and
below Friday's low of $143.22. Brent crude <LCOc1> settled at
$141.87 a barrel, down $2.55.
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 Fourth 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 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 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 Monday, oil prices were pressured by a gain in the
dollar, which reached a one-week high against a basket of major
currencies, 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 over 40 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 Wong in in Perth; Editing by Marguerita
Choy)
(rebekah.kebede@thomsonreuters.com; +1 646 223 6057; Reuters
Messaging: rebekah.kebede.reuters@reuters.net))
