UPDATE 8-Oil falls about 1% on surprise U.S. crude build, Saudi crude output

* Dollar recovers on safe-haven flows amid Trump impeachment
probe
* U.S. crude stockpiles notch surprise weekly rise -EIA
* Saudi restored oil output capacity to 11.3 mln bpd-sources
* Trump: deal with China could happen sooner than people
think

(Updates to settlement, adds analyst comment)
By Laila Kearney
NEW YORK, Sept 25 (Reuters) - Oil shed more than 1% on
Wednesday, logging a second straight day of losses after U.S.
crude stockpiles unexpectedly rose and as Saudi Arabia
maintained a faster-than-expected recovery of its oil
production.
A rally in the dollar index .DXY , which moves inversely
with oil, also weighed on crude futures as a Democratic-led
chamber was launching an official presidential impeachment
inquiry.
Brent crude futures LCOc1 settled at $62.39 a barrel,
shedding 71 cents, or 1.1%, while U.S. West Texas Intermediate
crude CLc1 settled 80 cents, or 1.4%, lower at $56.49 a
barrel.
U.S. crude inventories unexpectedly rose 2.4 million barrels
last week, the Energy Information Administration said, instead
of declining 249,000 barrels as analysts forecast. EIA/S
"The market was under pressure from the Saudis returning to
full production much sooner than the market thought plus the
bearish inventory stats," said Andy Lipow, president of Lipow
Oil Associates in Houston. "But it turned around as President
(Donald) Trump said a China deal could come soon."
Sources told Reuters that the Saudi Arabia restored
production capacity to 11.3 million barrels per day, a quicker
recovery than expected after the Sept. 14 attacks that halved
more than half the kingdom's output. Saudi Energy Minister Prince Abdulaziz bin Salman and the
chief executive of state oil company Aramco, Amin Nasser, have
said output will be fully back online by the end of September.
Oil prices pared some losses during the session after U.S.
President Donald Trump said a deal to end a nearly 15-month
trade war with China could happen sooner than people think.
Global markets had weakened on Tuesday after Trump
criticized China's trade practices at the United Nations General
Assembly and said he would not accept a "bad deal" in U.S.-China
trade negotiations.
China is the world's largest oil importer and is
second-largest crude consumer after the United States.
Trump also said on Tuesday he saw a path to peace with Iran,
cooling other risk premiums built into oil prices, particularly
after the attack on Saudi Arabia's oil facilities boosted prices
more than 15% in a single day last week. Both the kingdom and
the United States have blamed Iran for the attack. The market has nearly pared all the gains since the attack.
Commerzbank's Carsten Fritsch said this week's dip in prices
was premature.
"It is reasonable to doubt that Saudi Aramco has already
made good the outages in the affected facilities almost
completely," he said.

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Saudi Arabia crude oil stocks https://tmsnrt.rs/31saE7g
U.S. crude stockpiles https://tmsnrt.rs/2lyhloz
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