Oil paused its two-week rally and fell nearly 2 percent on Tuesday as U.S. consumer confidence dropped for the second consecutive month.

Light, sweet crude for September delivery fell 1.15 U.S. dollars, or 1.7 percent, to settle at 67.23 dollars a barrel on the New York Mercantile Exchange.

Oil prices were weighed after the Conference Board reported Tuesday that U.S. consumer confidence fell for a second straight month. The index dropped to 46.6 in July from 49.3 in June, below analyst expectations of 49.0, illustrating sentiment remained hampered by a difficult job market. Adding to oil's loss was the fact that investors took profits from previous gains and the dollar rebounded against a basket of major currencies.

The market now was awaiting the inventories data due to be released on Wednesday, which was expected to be a buildup in crude, also pushing oil prices lower.

London Brent for September delivery dropped 1.06 dollars to 69. 75 dollars a barrel on the ICE Futures exchange.