Oil near $144, US plans calm financial markets

By Santosh Menon

LONDON (Reuters) - Oil eased to near $144 a barrel on Monday as a U.S. plan to restore confidence in its financial sector shored up the dollar and financial markets, with worries about threats to supplies providing support.

The U.S. government at the weekend unveiled an emergency plan to shore up embattled mortgage giants Fannie Mae and Freddie Mac -- which control $5 trillion in debt -- easing concerns about the wider economy and helping the dollar rally from a near-record low against the euro.

The dollar later surrendered some of its gains after U.S. stocks eased, with Fannie Mae and Freddie Mac paring their advance on concerns the government's rescue plan may not be enough.

U.S. light crude for August delivery was 97 cents down at $144.11 a barrel by 1542 GMT. London Brent crude was $1.18 cents down at $143.31.

"Once again we are back into those phases where the economic news is going to lead it. The market has decided that supply is going to be tight," said Simon Wardell of Global Insight.

Gerard Burg, a commodities analyst from the National Australian Bank in Melbourne, said: "Oil's fall... is generally due to gains in the U.S. dollar as well as some profit-taking in the market."

U.S. crude hit a record high of $147.27 last Friday, as concerns about threats to global oil supplies and a deteriorating U.S. economic landscape hit financial markets, driving investors to seek the relative safety of commodities.

Oil initially fell by more than $2.50 on Monday, but pared those losses as Brazilian oil workers began a five-day strike, once again highlighting supply fears in a tight market.