UPDATE 7-Oil falls for a second day as investor risk appetite wanes

* Oil prices still on track for fifth straight monthly gain

* U.S. oil output soon expected to exceed 10 mln bpd

* U.S. crude stocks forecast to see first build in 11 weeks -poll

* Coming Up: API U.S. oil stock data at 4:30 p.m. EST (2130 GMT) (New throughout, updates prices, market activity and analyst comments; changes byline, dateline from LONDON)

HOUSTON, Jan 30 (Reuters) - Oil prices fell for a second day on Tuesday, driven by ongoing evidence of rising U.S. crude output, while wary investors sold off stocks, bonds and commodities.

Brent crude futures were down 90 cents, or 1.3 percent, at $68.56 a barrel at 11:16 a.m. EST (1615 GMT) after touching a session low of $68.40.

U.S. West Texas Intermediate futures were trading $1.28, or nearly 2 percent, lower at $64.28 a barrel.

"There are so many longs in the market that they're now taking profits. This could just be a one-day thing before we start to see a move to the upside again," said Tariq Zahir, analyst at Tyche Capital Advisors in New York.

U.S. blue-chip stocks opened under pressure, weighed down by a jump in government bond yields and an earlier rise in the dollar.

With oil's negative correlation to the dollar reaching its strongest in a month, even continued signs of robust demand for crude were not enough to ward off profit taking following last week's rise to three-year highs.

Oil's inverse relationship to the dollar, whereby a stronger currency makes it more expensive for non-U.S. investors to buy dollar-denominated assets, has reasserted itself this week.

"Correlations are funny things. Sometimes they work and sometimes they dont. For most of 2017, the relationship between the dollar and the oil price was not obvious," PVM Oil Associates strategist Tamas Varga said in a note.

"This is the trend that seems to be turning, judging by yesterdays price action and this mornings moves. Rising U.S. bond yields caused dollar shorts cover and as a result oil prices fell."

Expectations for U.S. crude inventories to rise for the first time in 11 weeks may also be keeping oil under pressure, according to a preliminary poll by Reuters on Monday.

U.S. production is already on par with that of Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC). Only Russia produces more, averaging 10.98 million barrels per day (bpd) in 2017.

"The global trend seems to be indicating more oil is coming into the market despite best efforts by the Saudis and Russians to curtail output," said John Kilduff, partner at Again Capital LLC in New York.

(Additional reporting by Amanda Cooper in London and Henning Gloystein in Singapore Editing by Marguerita Choy)