UPDATE 7-Oil prices post weekly loss as supply fears wane

* Both benchmarks lose nearly 4% this week
* Trump considers delisting Chinese firms from U.S. markets
* IEA could cut oil demand estimates for 2019 and 2020
* China reports drop in industrial profits in August
* Saudi oil output recovery dims supply concerns

(Adds CFTC data in last paragraph)
By Stephanie Kelly
NEW YORK, Sept 27 (Reuters) - Oil prices fell on Friday and
posted a weekly loss on a faster-than-expected recovery in Saudi
output, while investors also worried about global crude demand
amid slowing Chinese economic growth.
During a volatile session, Brent crude LCOc1 futures fell
83 cents, or 1.3%, to settle at $61.91 a barrel, after dropping
to a session low of $60.76 a barrel.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell
50 cents, or 0.9%, to settle at $55.91 a barrel. It hit a
session low of $54.75 a barrel.
Brent fell 3.7% for the week, its biggest weekly loss since
early August. WTI lost 3.6%, its steepest loss since mid-July.
Crude futures fell along with other higher-risk assets after
news the U.S. government is considering the possibility of
delisting Chinese companies from U.S. exchanges, a source
briefed on the matter said on Friday. The move would be a
radical escalation of trade tensions between the U.S. and China.
Earlier in the session, futures fell after Iranian President
Hassan Rouhani said the United States offered to remove all
sanctions on Iran in exchange for talks. However, U.S. President
Donald Trump then said he had refused the request by Tehran.
"We've really been following headline to headline," said
Phil Flynn, an analyst with Price Futures Group in Chicago.
Also weighing on prices, a Wall Street Journal report citing
unnamed sources said Saudi Arabia had agreed a partial ceasefire
in Yemen, said analysts in the Reuters Global Oil Forum.
"Saudi Arabia has occupied center stage in prompting a major
upswing in oil price volatility through most of this month both
on a daily and weekly basis," Jim Ritterbusch, of Ritterbusch
and Associates, said in a note.
Brent is just above its level before attacks on Saudi
facilities on Sept. 14, which initially halved the kingdom's
production.
Sources told Reuters this week that Saudi Arabia had
restored capacity to 11.3 million barrels per day. Saudi Aramco
has yet to confirm it is fully back online. The International Energy Agency (IEA) said it might cut its
estimates for global oil demand for 2019 and 2020 should the
global economy weaken further. In China, the world's second-largest economy and biggest
importer of crude oil, industrial companies reported a
contraction in profits in August.
Key oil freight rates from the Middle East to Asia rocketed
as much as 28% on Friday in the global oil shipping market,
spooked by U.S. sanctions on units of China's COSCO for alleged
involvement in ferrying crude out of Iran. The COSCO vessels account for about 7.5% of the world's
fleet of supertankers, Refinitiv data showed.
Emerging details related to the Trump impeachment inquiry
also helped to dent demand sentiment, analysts said.

"An impeachment would add to the uncertainty of the U.S.
economy," Flynn said.
In an indication of future production, U.S. energy firms
reduced the number of oil rigs this week, and for a record 10th
month in a row. Drillers cut six oil rigs in the week to Sept.
27, bringing the total count down to 713, the lowest since May
2017, General Electric Co's GE.N Baker Hughes energy services
firm said on Friday. RIG-OL-USA-BHI Money managers cut their net long U.S. crude futures and
options positions in the week to Sept. 24 by 8,199 contracts to
212,561, the U.S. Commodity Futures Trading Commission (CFTC)
said on Friday. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphics-led story on the impact of supply shocks on
prices, click on ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>