UPDATE 8-Oil prices slide 2% after report Trump weighed easing Iran sanctions

* OPEC cuts oil demand forecasts, following EIA
* Trump discussed easing Iran sanctions -report
* U.S. crude inventories drop to lowest in nearly a year
-EIA
* Graphic on inventories: https://tmsnrt.rs/2ZYH9NT

(Updates to settle, adds comments, latest from Iran)
By Devika Krishna Kumar
NEW YORK, Sept 11 (Reuters) - Oil prices tumbled more than
2% on Wednesday after a report that U.S. President Donald Trump
weighed easing sanctions on Iran, which could boost global crude
supply at a time of lingering worries about global energy
demand.
Market participants cited a report from Bloomberg that Trump
discussed easing sanctions on Iran to help secure a meeting with
Iranian President Hassan Rouhani later this month.
The Bloomberg report, attributed to three unnamed sources,
said then-National Security Advisor John Bolton argued against
such a step. (https://tinyurl.com/y4wcevfp)
Brent crude LCOc1 settled $1.57, or 2.5% lower, at $60.81
after hitting a session low of $60.52, while U.S. West Texas
Intermediate CLc1 fell $1.65, or 2.9% to end the session at
$55.75 a barrel after sliding as low as $55.61.
Bolton's departure removes one of the strongest advocates of
a hard line towards Iran from Trump's White House. "The reason the market reacted so dramatically is that the
biggest bearish overhang on the market is the possible re-entry
of Iranian oil," said Phil Flynn, an analyst at Price Futures
Group in Chicago. "We realized what a great impact it had on the
market late last year when Trump granted waivers to the biggest
buyers of Iranian oil."
"Bolton leaving suggests that there could be a return to the
market of that oil, perhaps by the end of the year."
Iran will not negotiate with the United States while
sanctions on Tehran are still enforced by Washington, Rouhani
told his French counterpart Emmanuel Macron in a phone call on
Wednesday, Iranian state media reported. "Oil prices are down on concern that the U.S. administration
could ease its stance versus Iran, which could see disrupted
Iranian oil barrels returning to the market if US sanctions
against Iran get eased." UBS oil analyst Giovanni Staunovo said.
"This outcome would make OPEC+ target to keep the oil market
in balance even more challenging in 2020."
Oil prices have eked out gains so far this month, supported
by declines in global inventories and signs of easing trade
tensions between the United States and China. Prices rose this week after Prince Abdulaziz bin Salman,
Saudi Arabia's new energy minister, said oil policy would not
change and said the OPEC+ output cut deal would be maintained.

Separately, the U.S. Energy Information Administration said
domestic gasoline stocks decreased less than expected last week
while crude stocks fell to the lowest in nearly a year.
"Gasoline stocks fell by 682,000 barrels, slightly less than
expected, whilst distillate stocks increased unexpectedly by 2.7
million barrels," said Carsten Fritsch, oil analyst at
Commerzbank AG in Frankfurt, Germany.
"It seems that the market finally focuses more on bearish
product stocks than on bullish crude stocks."
OPEC cut its forecast for growth in world oil demand in 2020
due to an economic slowdown. OPEC/M The U.S
Energy Information Administration (EIA) also slashed demand
forecasts this week, and growing signs of slowdown were flagged
by oil traders and executives attending industry gatherings in
Singapore and Abu Dhabi. OPEC has pointed to rising global production next year.
Weekly U.S. crude production has surged to a record at 12.4
million bpd while a monthly report from the EIA forecast output
to average 13.23 million bpd in 2020.
Limiting the downside to oil prices, Iraqi Oil Minister
Thamer Ghadhban said OPEC would discuss whether to deepen output
cuts, when ministers meet on Thursday. Russia's Energy Minister Alexander Novak said the alliance
of OPEC and other producers, known as OPEC+, would discuss
global oil demand, but there were no fresh proposals to change
production cut.


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CHART: Brent oil still targets $64.57 L3N2620D1
GRAPHIC: U.S. crude inventories weekly changes https://tmsnrt.rs/2y7mC9g
CHART: U.S. oil may retest resistance at $58.59 L3N2620SG
GRAPHIC: U.S. crude inventories https://tmsnrt.rs/2ZYH9NT
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