Oil below ; gasoline worry offsets Iran relief

SYDNEY, Apr 9 (Reuters) Oil fell below a barrel on Monday, extending a decline after Iran released 15 British sailors and marines last week, although concerns over the state of pre-summer U.S. gasoline supplies tempered selling.

U.S. crude fell 43 cents to .85 a barrel by 0651 GMT, adding to Thursday's 10-cent drop after markets were closed on Friday for the Easter holiday. London Brent crude was down 33 cents at .91, although trading was expected to remain light as many European market remain shut for Easter Monday.

U.S. oil prices had rallied about to close just above a barrel during the two-week saga, but began to unwind those gains early last week as the UK and Iran moved toward a release of the 15 Britons.

Thursday's release of the military personnel eased fears that mounting tension could take a toll on supplies from the world's fourth-largest oil exporter, and prompted some speculators to trim their positions.

''Oil prices have been strongly inflated by the diplomatic tensions in the past two weeks,'' said Tetsu Emori, an analyst at Mitsui Bussan Futures in Tokyo.

Speculators on the New York Mercantile Exchange built net long positions on crude oil last week to the highest level in more than six months in a bet prices would rise, the Commodity Futures Trading Commission said Friday.

While Iran's stand-off with Britain has ended, tensions with the West over its nuclear programme continue.

President Mahmoud Ahmadinejad is expected to hold a news conference later on Monday to reveal the country's nuclear plans when he visits its uranium enrichment facility.

Iran's foreign ministry said on Sunday the country would not discuss its ''obvious right'' to master nuclear technology and that the country's military ''was totally prepared to defend the country''.

The United States has accused Iran of trying to build a nuclear bomb but Tehran has insisted that it is peaceful work.

Fundamental factors have also played a role in tempering oil's fall from six-month highs, with U.S. gasoline stocks falling sharply amid strong demand growth ahead of the summer, when demand peaks in the world's top consumer.

U.S. jobs data on Friday lent support, with employers adding a stronger-than-expected 180,000 new jobs in March and the unemployment rate falling to a five-month low.

Separately, however, a report from the Organisation for Economic Cooperation and Development pointed to a U.S. slowdown and signalled a weaker outlook for G7 economies as a whole.

''There is some mixed U.S. economic data... but there are no catalysts at the moment for the market to believe that the U.S.

is heading towards a recession,'' Emori said.

In Nigeria, the world's eighth-largest oil exporter, there appeared hope for a restoration in disrupted supplies following presidential elections scheduled later this month.

Royal Dutch Shell Plc said on Friday that about 477,000 barrels per day of its Nigerian production -- most of which has been out of commission for a year -- may resume in several months.

REUTERS CS DS1637