Oil prices drop on oversupply of OPEC output increases in July

TOKYO (Reuters) – Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years, as oversupply concerns rose after Reuters surveyed OPEC output rose in July to their highest for 2018.

September Brent crude future fell 25 cents, gold 0.3 percent, to $ 74.72 a barrel by 0654 GMT after rising nearly 1 percent on Monday. The September contract expires later on Tuesday and the more-active October contract was down 0.3 percent at $ 75.35.

U.S. West Texas Intermediate crude futures (WTI) were down 24 cents, or 0.3 percent, at $ 69.88 a barrel, after rising more than 2 percent in the previous session.

Brent futures are set to drop about 6 percent, the most since July 2016, while WTI futures are set to decline 5.8 percent, the biggest monthly drop since October 2017.

The Reuters survey showed OPEC increased production 70,000 barrels per day (bpd) to 32.64 million bpd in July, the most this year.

OPEC's third-largest producer of 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 Virendra Chauhan, an oil analyst at Energy Aspects in Singapore, said:

"Which are currently weak, will be dragged up," he said.

"The crude market should not ignore the recent turn in products, especially when it comes to that," Chauhan said.

Some support for prices may be released in this data.

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 July 27.

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.