* 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
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. 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. 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. 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. 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. 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.
https://tmsnrt.rs/31saE7g U.S. crude stockpiles
https://tmsnrt.rs/2lyhloz
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