Oil falls below $145

LONDON (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 was down $1.40 at $143.89 a barrel by 11:47 a.m., 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 $1.19 at $144.89.

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.

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.

Investors have rushed into crude oil ahead of the U.S. independence day holiday on July 4, because they are 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 risen about 50 percent this year, driven partly by the tensions over Iran's nuclear programme, plus expectations that global oil supplies will not be able to 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.