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UPDATE 5-Brent oil hits month low under $110 as slide into 7th day

* Brent set for longest losing streak since Oct 2012

* Coming up: weekly U.S. API inventory data at 2030 GMT

LONDON, July 8 (Reuters) - Brent crude fell to a one-month low below $110 a barrel on Tuesday on improved prospects for a rise in Libyan oil exports and easing fears of supply disruption in Iraq.

The benchmark is headed for a seventh straight session of losses, the longest losing streak since October 2012, and has shed more than 5 percent since the Iraq crisis drove prices to a nine-month high of $115.71 in June.

Libya's El Sharara oilfield has resumed operations and will increase output gradually, a spokesman for state-run National Oil Corp (NOC) said on Tuesday, which may free up more oil for export after a port deal was agreed with rebels last week.

Brent crude for August delivery was at $109.54 a barrel by 1355 GMT, down 70 cents, just slightly above a month low of $109.41 hit earlier in the session.

The U.S. benchmark fell 17 cents to $103.70 in choppy trading and was on course for its eighth straight day of declines.

Olivier Jakob, an analyst at Petromatrix in Zug, Switzerland, said traders now see less risk that Islamist militants in Iraq will advance beyond the edge of Baghdad and disrupt oil flow in the country's south.

"The oil fields in the south are not in direct danger, and the oil fields in the north and Kurdistan are also not in danger. So for now, it is difficult to see any strong disruptions to exports," Jakob said.

"The fact that the big ports in Libya are now reopening also makes some prompt crude oil available to the market."

Iraq's new parliament has also brought forward the date of its next session to July 13 after criticism it had not responded quickly enough to the crisis in the country, with the top three government positions not yet being nominated.

The Brent future contracts for delivery in September moved to a small premium over contracts for delivery next month, which traders said was an indication of weak demand.

"Short term, traders are starting to take their money off the table (in Brent)," Rob Montefusco, an oil trader at Sucden Financial in London, said. "There's a bit of liquidation in there as well."

LIBYAN EXPORTS

In Libya, preparations are under way to reopen two major oil ports in the east that were shut by protests almost a year ago. The Ras Lanuf and Es Sider ports make up more than a third of the OPEC producer's export capacity.

The resumption of production at Libya's El Sharara oilfield, announced by a spokesman for the state-run National Oil Corp (NOC), may free up more oil for export.

Any additional Libyan barrels that may emerge would be regarded as a negative for Brent, BNP Paribas analysts said in a note, though they said question marks remained about how much maintenance would be needed at oilfields and pipelines.

Libya's oil output was at 326,000 barrels per day, a NOC spokesman said on Monday, well below its post-civil war high near 1.4 million bpd.

Investors are also awaiting weekly oil inventory data from the United States due later on Tuesday and Wednesday for clues on the demand outlook in the world's largest oil consumer.

U.S. commercial crude inventories were forecast to have dropped in the week to July 4, a preliminary Reuters survey of five analysts showed. Distillate stockpiles were expected to have risen and gasoline inventories to be unchanged.

(Additional reporting by Rowena Caine in London and Florence Tan in Singapore; Editing by Jason Neely and Jane Baird)