* Netanyahu says Iran lied after signing nuclear deal
* U.S. crude output jumps to record 10.26 mln bpd in Feb-EIA
* Marathon to buy rival Andeavor, creating biggest U.S. refiner
(Updates prices, adds Iranian reaction to Netanyahu accusations, adds U.S. crude production data)
By Ayenat Mersie
NEW YORK, April 30 (Reuters) - Oil prices rose on Monday, bouncing off early losses after Israeli Prime Minister Benjamin Netanyahu said Israel had proof that "Iran lied" about its nuclear capabilities, and that he was sure U.S. President Donald Trump would do "the right thing" in reviewing the country's nuclear deal with western powers.
Prices of the Brent June contract LCOc1 , which expires Monday, gained 53 cents to settle at $75.17 a barrel. Prices for the more actively traded Brent July contact LCOc2 gained 90 cents to settle at $74.69.
U.S. West Texas Intermediate (WTI) futures CLc1 were up 47 cents on the day to settle at $68.57 a barrel.
Earlier in the session, both benchmarks had been down about 1 percent. Both started to gain after Netanyahu said he would soon have an announcement regarding Iran.
"Oil reacted very severely" to Netanyahu's announcement, said Phil Flynn, analyst at Price Futures Group in Chicago.
Oil prices jumped after Netanyahu said Israel has evidence that Iran lied about its nuclear program after signing the 2015 agreement with global powers. dismissed Netanyahu's accusations, calling them "propaganda." may be the flavor of the day, but the larger issue driving this is what will Trump do with Iran? And what will Iran do in response? And that uncertainty is the fundamental driver, not so much Netanyahu," said Walter Zimmerman, chief technical analyst for United-ICAP.
Trump has until May 12 to decide whether to restore sanctions on Iran that were lifted after the international agreement.
Oil prices have risen this month to their highest since late 2014, driven by concern over potential disruptions to Iranian crude flows. Analysts said the market is extremely sensitive to any developments on the nuclear deal and sanctions.
"Until May 12, you're not going to see any significant downward correction," PVM Oil Associates strategist Tamas Varga said. "Reimposing U.S. sanctions is not a foregone conclusion just yet."
Meanwhile, U.S. crude production jumped 260,000 barrels per day (bpd) to 10.26 million bpd in February, the highest on record, the Energy Information Administration said in a monthly report on Monday. the latest development in the U.S. shale boom, Marathon Petroleum Corp (NYSE:MPC) MPC.N agreed to buy rival Andeavor ANDV.N for more than $23 billion. The largest-ever tie-up between U.S. refiners will give the combined company a nationwide presence and increased access to growing export markets.
The deal gives Marathon more exposure to U.S. shale, thanks to Andeavor's existing logistics and terminal operations in Texas and North Dakota shale regions.