July 4 (Bloomberg) -- Crude oil fell from near a record as Iran said it gave a ``constructive'' response to incentives intended to persuade the nation to stop uranium enrichment.

A compromise may allay concern that Israel is ready to attack Iran's nuclear installations, starting a conflict likely to cut supply from OPEC's second-largest oil producer. Futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.

``For both sides to show they can give up something could calm down political risk in the area,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. Prices may ``in the immediate term drop one or two dollars'' if a compromise is reached.

Crude oil for August delivery fell as much as $1.41, or 1 percent, to $143.88 a barrel in electronic trading on the New York Mercantile Exchange, trading for $144.14 at 2:03 p.m. London time.

The government in Tehran has prepared and presented its reply ``with a focus on common ground and a constructive view,'' state television cited Saeed Jalili, secretary of Iran's Supreme National Security Council, as saying today in a telephone call with European Union foreign policy chief, Javier Solana.

Brent crude oil for August settlement was at $144.92 a barrel, down $1.16, on London's ICE Futures Europe exchange at 2:04 p.m. London time. Futures climbed to $146.69 yesterday, a record intraday price.

Brent traded higher than its U.S. equivalent for a third day, at a premium of 91 cents, on expectations that seasonal maintenance this month will curb output from North Sea fields.

Shunning Stocks

Oil has set new highs the last three days as money managers bought futures, shunning stocks as global equity indexes fell for a fifth week. Crude may rise further next week, according to analysts surveyed by Bloomberg.

``Investment demand has been driving prices higher,'' Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a television interview. ``Longer-term pension funds, investment funds, but also banks and insurance companies are pouring their money out of the equity market, out of the U.S. dollar and into commodity markets and especially oil.''

China has scrapped a 75 percent rebate on value-added taxes levied on crude-oil imports, Caijing magazine reported, citing an unidentified official from China National Petroleum Corp. The government had refunded VAT on imports since April to help narrow refiners' losses, the report said.

Nymex electronic trading continues today as other U.S. markets are closed for the Independence Day holiday.

The fewest Americans in three years will travel over the July 4th weekend as record gasoline prices and a slowing economy force consumers to curtail spending, according to AAA, the largest U .S. motoring group. U.S. gasoline demand, which typically rises at this time of year, fell a 10th time in the week to June 27, according to data from MasterCard Inc.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: July 4, 2008 09:06 EDT