UPDATE 8-Oil higher on U.S. budget deal hopes
* US Senate edges closer to budget deal, needs House OK
* Tensions over Iran's nuclear programme ease after talks
* No EIA data due to shutdown, API report later on Weds
NEW YORK, Oct 16 (Reuters) - Crude oil futures rose on Wednesday as it appeared Congress was close to an 11th-hour deal to raise the government's debt ceiling and prevent a default.
The U.S. government shutdown and fiscal deadlock have roiled financial markets and spurred worries about energy demand in the world's largest oil consumer.
The oil market followed the stock market higher on "optimism that something's going to be accomplished" to reopen the U.S. government, said Gene McGillian, oil analyst with Tradition Energy in Stamford, Connecticut.
Major U.S. stock indices rose and the U.S. dollar was also higher as a senior Democratic aide said the Republican-led House of Representatives was expected to pass a bipartisan fiscal bill inked by the Democratic-led U.S. Senate. on
U.S. House Republicans were expected to hold a private meeting at 3 p.m. (1900 GMT) to discuss the Senate's fiscal plan.
The front-month November Brent contract, which expires on Wednesday, was up $1.04 per barrel to $111.00 by 1:38 p.m. EDT (1738 GMT). The previous session, Brent fell $1.14. December Brent rose $1.63 per barrel to $110.05.
Brent's premium over U.S. oil has remained between the 10- and 200-day moving averages of $7.62 and $10.04 for the last seven sessions and was last trading at $8.32 per barrel.
The U.S. benchmark rose $1.56 to $102.77. On Tuesday, it fell $1.20. On Friday, the November U.S. oil futures contract lost its premium over December futures , and the gap between the two contracts widened further, by as much as 22 cents.
A perceived scarcity of oil at Cushing, Oklahoma, the delivery point for the benchmark U.S. oil futures contract, has reversed as decreased demand for oil has slowed drawdowns. What's more, energy intelligence firm Genscape reported a build in Cushing stocks last week.
Traders who had bet on an increasing draws at Cushing got burnt as the market swung into contango, where front-month prices are lower than the months further out.
"We saw a 13-week period of heavy drawdowns in Cushing and we saw a corresponding rally in WTI," said Virendra Chauhan, an oil analyst with Energy Aspects in London. "The sentiment has changed and traders have had their fingers burnt on wild swings in the spreads."
Analysts are calling for another build in inventories this week, though the market will not have government data to compare forecasts. The U.S. Energy Information Administration will not release its weekly oil inventory data from this week due to the government shutdown, but industry group the American Petroleum Institute will publish its report at 2030 GMT on Wednesday.
A second day of talks between six world powers and Iran over Tehran's nuclear program built hope for an end to a decade-long standoff. Still, analysts said any increase in supply from Iran will be a long way off if sanctions are lifted.
Years of sanctions have cut Iranian oil exports by more than 1 million barrels per day (bpd).
Ineos said the Grangemouth refinery in Scotland would remain shut down without making it clear whether the closure would be permanent. This fed supply concerns, which buoyed Brent.
Refinery workers have threatened to strike, and the operator said it would put a proposal to workers and review its position on the plant with shareholders next week.
Steam and power from Grangemouth is crucial for the operation of the Kinneil oil-processing terminal, where the majority of the UK's North Sea crude oil comes ashore.