Investors were also eyeing signals from Iran, the world's fourth-largest oil exporter, in its dispute with the West over its nuclear work, and some saw signs that Iran may be more flexible in negotiations.

"It's mainly the stronger dollar," said Nauman Barakat, senior vice president at Macquarie Futures USA, of oil's drop.

"We might see further correction all the way down to the $140 area."

US crude traded at US$141,43 a barrel by 1440 GMT, below Friday's intra-day low of US$143,22.

Brent crude fell US$2,12 to US$142,30.

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

Yesterday, 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 US dollar can reduce the appeal of oil and other commodities to investors as a hedge against inflation.

Nampa-Reuters

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