Oil extends decline after biggest monthly slump in two years

Oil prices fell on Wednesday after industry data showed US stockpiles of crude unexpectedly rose, starting the new month in negative territory after the largest monthly decline in two years in July.

October Brent crude futures dropped 29 cents, or 0.4 per cent, to $73.92 a barrel by 0044 GMT, adding to a 1.8 per cent loss in the previous session.

US crude futures were down 44 cents, or 0.6 per cent, at $68.32 a barrel, having dropped nearly 2 per cent on Tuesday.

Brent fell more than 6 per cent in July, while US crude futures slumped about 7 per cent, the biggest monthly decline for both benchmarks since July 2016.

Data from the American Petroleum Institute showed domestic crude inventories rose by 5.6 million barrels last week. A Reuters poll had forecast a fall of 2.8 million barrels.

Official data from the US Energy Information Administration is due later on Wednesday.

Signs that a supply disruption in the Bab al-Mandeb Strait in the Red Sea could be resolved also weighed on prices.

Yemen's Houthi group said it was ready to unilaterally halt attacks in the Red Sea to support peace efforts. Saudi Arabia suspended oil shipments through the strait last week after the Houthis attacked two Saudi oil tankers.

A Reuters poll showed that oil prices are likely to hold fairly steady this year and next as increased output from OPEC and the United States meets growing demand led by Asia and helps to offset supply disruptions.

OPEC has pledged to offset the loss of supply from Iran, the group's third-biggest producer.

Looming US sanctions have already started to cut Iranian exports, with buyers from its biggest customers in Asia cutting imports to a seven-month low in June.