UPDATE 7-Oil pares gains after Republican comments on budget
* U.S. government shutdown drags into fourth day
* Tropical Storm Karen shutting production in Gulf of Mexico
(Adds details on Boehner's comments, fresh quote. Updates prices.)
NEW YORK, Oct 4 (Reuters) - Oil futures sharply pared gains on Friday after comments by a Republican legislator on U.S. budget talks suggested the government shutdown in the United States would drag on and limit demand in the world's largest oil consumer.
U.S. House of Representatives Speaker John Boehner on Friday said the House will not vote on a spending bill without conditions to end the government shutdown, and demanded spending cuts in exchange for raising the government's debt ceiling.
The comments suggested the political stalemate in Washington would continue.
Brent crude was last trading 5 cents higher at $109.12 at 11:41 a.m. EDT (1541 GMT), after trading as high as $109.77.
U.S. oil was trading 25 cents higher at $103.56, after rising as high as $104.19.
An approaching tropical storm in the Gulf of Mexico continued to limit losses. Oil producers started shutting in offshore oil production in the Gulf of Mexico ahead of Tropical Storm Karen's arrival, providing support for oil.
The Louisiana Offshore Oil Port (LOOP) will suspend marine operations starting at noon CDT (1700 GMT) on Friday.
The U.S. government shutdown entered its fourth day and nearly 1 million government workers remained home without pay while some Federal agencies and programs stopped functioning, cutting into the release of key economic data.
The United States faced the possibility of defaulting on its financial obligations on Oct. 17 as opposing political parties remained locked in debate over whether to raise the debt ceiling.
"I think the market got a little bit of a boost from concerns about Tropical Storm Karen and the shut down of some wells," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut. "The worries about this government shutdown will start to reassert itself."
The amount of oil production coming from U.S. onshore shale fields would offset offshore production losses from the storm, analysts said, while supply remained ample.
"New production coming from onshore in Texas and the Dakotas has alleviated some of the problems of shutting offshore production and despite recent drawdowns in U.S. inventories we still have an ample amount on hand," McGillian said.
The U.S. Gulf basin provides nearly one-fifth of daily U.S. oil output.
The dispute over U.S. government spending has weighed on financial markets and sapped the dollar, which was off an eight-month low on Friday against a basket of major currencies.
A weaker dollar is supportive for oil, as importing nations find it cheaper to buy dollar-priced oil in their own currencies.
Stock markets were on track for steep losses for the week due to the government shutdown.
(Additional reporting by Robert Gibbons in New York, Alexander Winning in London and Jacob Gronholt-Pedersen in Singapore; Editing by Jason Neely, James Jukwey, Jeffrey Benkoe and Andrew Hay)