Oil pauses near record over $145

Crude took a breather above $145 a barrel today a day after tensions between Iran and Israel prompted traders to stock up on crude ahead of the Independence Day long weekend which sent futures to an all-time peak.

US crude inched down 6 cents to $145.23 a barrel by 0613 GMT, off an all-time high of $145.85 touched yesterday. The contract has risen more than 50% this year.

London Brent gained 8 cents to $146.16, near the record $146.69 hit a day ago.

Bullish investors have rushed into crude ahead of the Fourth of July public holiday, traditionally the peak US driving period, as they do not want to be caught short should the Iran-Israel row escalate, analysts said.

Heightened tension between Israel and Opec's second-biggest producer Iran has put crude prices on the boil over the past two weeks, helping crude smash records five times in the last seven sessions.

"There weren't many changes in the situation. I think the current market is driven by speculative money, not by fundamentals," said Takeda Makoto, an analyst at Bansei Securities.

Speculation has mounted in recent weeks that Israel may be preparing a preemptive strike against Tehran's nuclear programme.

Iran has threatened to block crude shipments through the Strait of Hormuz if it were attacked. Approximately 40% of the world's seaborne crude trade passes through that Strait.

Concern over tight supplies and money inflows from investors buying crude to hedge against inflation, and a weakened dollar also lent support.

Saudi Oil Minister Ali al-Naimi reiterated his belief that the current crude rally was driven by speculators rather than any shortage of crude. He repeated promises that Saudi Arabia would pump more crude if there was demand. Refiners in the US and Asia have said official Saudi prices make it uneconomical to buy more barrels.

Venezuelan President Hugo Chavez said that a price of $100 per barrel for oil is "more than enough".

"If it were up to us, $100 per barrel would be more than enough, but it's not our fault," Chavez said during a televised address. Crude prices have surged seven-fold since the start of 2002 as supply struggles to keep up with demand from emerging nations like China. The price spike has caused fuel protests worldwide and hurt demand in consuming nations like the US.

Today, the dollar steadied against the euro and weighed on crude prices, as the greenback kept most of the sharp gains made a day ago after US payroll data came in close to expectations and eased fears about the health of the US job market and economy.

Comments from the head of the European Central Bank that suggested further interest rate increases in Europe could be put on hold also supported the US currency.

Tropical Storm Bertha, which formed yesterday in the eastern Atlantic Ocean, was not expected to threaten any US oil and gas production facilities in Gulf of Mexico. Hurricane experts have predicted an above-average number of storms and hurricanes through the US hurricane season, which began on 1 June and runs through the end of November.