Brent crude slipped towards $106 a barrel on Thursday and was set to post its biggest monthly loss in more than a year as higher Opec output and disappointing demand in the United States outweighed tensions in the Middle East and Africa.

Gasoline stockpiles rose in the United States even though it is the peak driving season, raising concern over the outlook for demand in the world's largest oil consumer.

Opec pumped more oil in July than in June despite concerns that unrest in Africa and the Middle East could hurt production, a Reuters survey showed.

Brent crude has fallen more than 5 percent this month and is on track to post its biggest monthly loss since April 2013. On Thursday the September contract had fallen 26 cents to $106.25 a barrel by 0335 GMT.

US crude futures for September delivery dropped 69 cents to $99.58 a barrel, putting the contract on course for a 5.6 percent fall on the month, the biggest since October.

The contract hit a two-week low of $99.16 earlier in the day after data from the Energy Information Administration (EIA) showed that gasoline and distillates stockpiles rose despite a bigger-than-expected drop for crude.

"We've got quite a build in gasoline inventories and demand figures have been disappointing," Ric Spooner, chief analyst at CMC Markets in Sydney, said.

Crude supply from the United States is also increasing as exports reached 288,000 barrels per day in May, the highest since April 1999, according to EIA data.

The strength of the US dollar in the past week has also weighed on dollar-denominated oil, Spooner said.

The dollar held just below a 10-month peak against a basket of major currencies on Thursday after soaring on strong US economic growth data. A stronger greenback raises the cost of investing in oil for holders of other currencies.

Oil prices have eased after hitting multi-month highs in June because of geopolitical tension in parts of the Middle East, Africa and Europe.

"Over the course of the last few weeks, the market had been prepared to unwind the risk premium that had built into markets for potential supply disruption in Iraq and Russia," Spooner said.

Still, investors are watching how sanctions on Russia over Ukraine will affect its oil exports.

"Now that both the EU and the US have stepped up measures to prevent some Russian companies from accessing the capital markets, this could perhaps mean disappointing oil exports from Russia," said Gordon Kwan, head of Asia oil and gas research at Nomura in Hong Kong.

"That, together with the Gaza tensions, could be a good support for Brent prices." - Reuters