Oil prices drop on oversupply of OPEC output increased in July

TOKYO (Reuters) – Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years, on an oversupply of a reported OPEC's output in July rose to its highest for 2018.

September Brent crude future fell 46 cents, gold 0.6 percent, to $ 74.51 a barrel by 0356 GMT after rising nearly 1 percent on Monday. The September contract expires today and the more-active October contract was down 0.5 percent to $ 75.20.

U.S. West Texas Intermediate crude futures (WTI) were down 43 cents, or 0.6 percent, at $ 69.70 a barrel, after rising more than 2 percent in the previous session.

For the month, Brent futures are set to drop 6.2 percent, the most since July 2016, while WTI futures are set to decline 5.9 percent to, the biggest monthly drop since March 2017.

Reuters survey showed the Organization of the Petroleum Exporting Countries (OPEC) increased production in July.

OPEC hiked production by 70,000 barrels per day (bpd) to 32.64 million bpd, the most this year. OPEC's third-largest producer. OPEC's third-largest producer. OPEC's third-largest producer.

U.S. President Donald Trump appeared to soften his approach to Iran, saying on Monday he would meet with President Hassan Rouhani without any preconditions. This was only a week after he was killed on Twitter to have a hard time on the country.

The United States has indicated that it wants to be broken down in the United States.

While the market was softened on Tuesday, some support may be released this week.

Six analysts polled ahead of the American Petroleum Institute (API), an industry group, and the US Department of Energy's Energy Information Administration (EIA) estimated, on average, that crude stocks fell about 3.2 million barrels in the week ended July 27.

"Inventories are getting really tight at Cushing," Greg McKenna, chief market strategist at AxiTrader said. "Inventory data is uber-import right now."

The API is scheduled for release at 4:30 pm EDT (2030 GMT) on Tuesday, and the EIA report is due at 10:30 am EDT on Wednesday.

Energy information company Genscape said that inventories at Cushing, Oklahoma, the delivery point for the WTI futures contract, rose almost 200,000 barrels, or nearly 1 percent, from Tuesday to Friday last week, according to traders.