* Oil below $145 a barrel, up 50 pct this year
* Iran hands over response to nuclear offer
* Venezuela's Chavez says $100 fair price for oil
By Jane Merriman
(Adds Iran handing over response, updates prices)
LONDON, July 4 (Reuters) - Oil dropped below $145 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 <CLc1> was down $1.28 at $144.01 a barrel by
1520 GMT, below an all-time high of $145.85 hit on Thursday. The
contract has risen more than 50 percent this year.
London Brent <LCOc1> was down $1.49 at $144.59.
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 programme.
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
programme.
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.
Oil has gained about 50 percent this year, driven partly by
the tensions over Iran's nuclear programme, plus expectations
that global oil supplies will not cope in the long term with
strong demand growth from newly industrialising China and India.
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.
"It's going to go higher before it goes lower," said
Christopher Bellew, of Bache Financial.
"Two trains are rushing towards each other. One is ...
rallying oil prices and the other is economic recession. At some
point they're going to collide."
Investment flows into oil have contributed to the price
surge, encouraged by commodities' strong returns this year
versus a feeble showing from equities.
"I think the current market is driven by speculative money,
not by fundamentals," said Takeda Makoto, an analyst at Bansei
Securities.
The weak U.S. dollar has also played a part in boosting oil,
which is priced in the U.S. currency.
The dollar drew some support on Friday after European
Central Bank President Jean-Claude Trichet appeared to play down
chances of further interest rate rises. []
(Editing by James Jukwey)
