UPDATE 7-U.S. oil ends with moderate gains on hopes of budget deal
* China's crude imports hit record high
* Investors eye Iran nuclear talks
* Coming up: Chinese GDP data on Friday
* EIA will not publish U.S. oil inventory data this week
(Adds details on budget negotiations, new quote. Adds settlement prices.)
NEW YORK, Oct 14 (Reuters) - U.S. oil prices ended slight higher on Monday as traders bought contracts to cover short positions ahead of a possible deal between U.S. political parties that would end a two-week fight over how to fund the government.
U.S. Senate leaders said they were nearing a deal to end the government shutdown, which began on Oct. 1, and to raise the U.S. debt limit.
"I think the main thing is the positive noises about a potential budget deal," said Michael Lynch, an oil analyst and president of consultancy Strategic Energy & Economic Research Inc in Winchester, Massachusetts. "People are less nervous about that."
U.S. oil ended the day 39 cents higher at $102.41 a barrel, after trading down to $101.06. Brent crude futures ended 24 cents lower at $111.04, after trading as low as $109.87.
The budget fight was expected to damage the global economy and dent oil demand in the United States, the world's largest oil consumer. International Monetary Fund chief Christine Lagarde warned of "massive disruption" to the global economy if the U.S. debt ceiling, which will be reached on Thursday, was not lifted.
"Not only is the U.S. standoff doing harm to the U.S. economy but the knock on effect is it will do harm to the global economy," said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
The spread between global benchmark Brent and U.S. oil benchmark West Texas Intermediate has widened in the past two weeks as the U.S. budget crisis has weighed more heavily on its domestic contract than on Brent.
Brent's premium over West Texas Intermediate <CL-LCO1=R> settled at $8.63 per barrel, after widening to its most since early June in the previous session at $10.01.
The spread should narrow in the next couple of weeks, Lynch said, as Brent prices ease as negotiations between the West and Iran over its nuclear program commence.
As well, the market is beginning to realize that the rate at which stockpiles at the Cushing, Oklahoma, storage hub, the benchmark delivery point for the U.S. oil futures contract, are being drawn has slowed in the last two weeks.
"The WTI market is getting closer to re-equilibration with the world," Lynch said. "People are starting to catch onto the fact that Cushing is no longer so grossly over supplied."
Talks about Iran's nuclear program are due to start in Geneva on Tuesday and will be the first since the election of President Hassan Rouhani, who has tried to improve ties with the West to pave the way for an end to sanctions, which have cut Iranian oil exports by more than one million barrels per day.
Ten U.S. senators said they were open to suspending the implementation of new sanctions on Iran but only if Tehran takes significant steps to slow its nuclear program.
In China, the world's second largest oil consumer, an unexpected decline in exports, reflecting weak global demand was moderately offset by data showing China's crude oil imports rebounded in September to a record high. Chinese GDP data will be released on Friday.
The U.S. Energy Information Administration will not publish its weekly oil inventory data this week for the first time since 1979 due to a lack of government funding.
(Additional reporting by Lin Noueihed and Jacob Gronholt-Pedersen; Editing by William Hardy and Bob Burgdorfer)