Oil drops below $141 a barrel

By Alex Lawler

LONDON (Reuters) - Oil retreated to below $141 a barrel on Monday, taking a pause from a record-breaking rally that has lifted prices by almost 50 percent this year.

Investors were eyeing mixed signals from Iran, the world's fourth-largest oil exporter, in its dispute with the West over its nuclear work, and a rise in the value of the dollar against other major currencies.

"The market had been trending sideways for a while and now there's a break downwards," said Christopher Bellew, senior oil broker at Bache Commodities.

"Once it made a break below Friday's lows, that probably sparked off a bit of technical selling."

U.S. crude traded at $140.77 a barrel by 2:20 p.m., below Friday's intra-day low of $143.22. Brent crude fell $2.90 to $141.52.

The New York Mercantile Exchange did not issue an official Friday closing price due to the July 4 holiday.

On Monday, the dollar 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.