Oil prices fell for the fourth straight day on Thursday, dipping below $71 a barrel after China sought to cool its economic growth by raising a key interest rate and the World Bank tentatively resolved a dispute with Chad, which had threatened to shut off an oil pipeline.

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U.S. Federal Reserve Chairman Ben Bernanke told Congress that rising energy prices threaten the strong economy and he suggested more interest rate increases eventually may be needed to keep inflation in check.

On Wednesday, U.S. government data showed refinery output rising and motor fuel demand weakening, apparently in response to higher pump prices.

Still, strong global demand for crude, limited spare production capacity and geopolitical uncertainty have conspired to put a high floor underneath oil prices, which are about 38 percent higher than a year ago. Rising energy prices lifted first-quarter profits at Exxon Mobil Corp. (XOM), which reported net income of $8.4 billion, or 7 percent more than last year.

The most serious geopolitical concern out there is the West's diplomatic standoff with Iran, OPEC's second largest oil producer, over its nuclear ambitions.

Light sweet crude for June delivery fell as low as $70.75 a barrel, before settling at $70.97, a decline of 96 cents on the New York Mercantile Exchange. Brent crude for June delivery on London's ICE Futures slumped to $71.28 a barrel, down 81 cents.

Gasoline futures declined by 6.16 cents to close at $2.0719 a gallon while heating oil futures slid 3.72 cents to close at $1.9857 per gallon. Natural gas futures settled at $6.805 per 1000 cubic feet, down 46.6 cents.

China's central bank said Thursday it will raise a key lending rate by just over a quarter percentage point to 5.85 percent in a move to cool the economy, which expanded at a 10.2 percent in the first quarter from a year ago. The rate hike of 0.27 percentage point, which goes into effect Friday, was the first by the People's Bank of China since October 2004.

Oil analyst Phil Flynn of Alaron Trading Corp. in Chicago said the move by China "may slow demand a little bit" but that Beijing's energy consumption would continue to rise at a rapid rate.

In other news that seemed to help cool prices, Chad and the World Bank have reached an agreement resolving a four-month dispute over how the central African country uses its revenues from a World Bank-backed oil program. The World Bank had frozen hundreds of millions of dollars in oil royalties banked in London and aid to Chad, which retaliated by threatening to shut off an oil pipeline carrying more than 100,000 barrels of crude per day.

But there is still plenty of unease on world oil markets about supply disruptions in Nigeria and the Gulf of Mexico, and fears of possible supply problems in Iran if its dispute with the West boils over.

The leaders of Russia and Germany urged Iran to fulfill its international nuclear obligations Thursday, a day before a U.N. Security Council deadline for Iran to stop enriching uranium. But Iran's hard-line President Mahmoud Ahmadinejad said no one could make Tehran give up its nuclear technology, warning that the United States and its European allies will regret their decision if they "violate the rights of the Iranian nation."

The U.S. Energy Department said on Wednesday gasoline demand was up only 0.3 percent over the past four weeks compared with the same period in 2005. But at this time last year, demand for the four-week period had risen 1.5 percent compared with the same period in 2004.

The average retail price of gasoline in the U.S. is now $2.91 a gallon, or 68 cents higher than a year ago. Still, Vienna's PVM Oil Associates noted that "if this close-to-stagnation in gasoline consumption becomes a new trend — potentially related to retail prices of close to $3 a gallon — summer shortages would become more unlikely."

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