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Crude cheers US debt deal; crisis lurches toward conclusion

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Crude oil rose on Wednesday, pushing U.S. oil to a sharply higher close, 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.

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. U.S. House Republicans were expected to hold a private meeting at 3 p.m. to discuss the Senate's fiscal plan.

Brent crude for November, which expires on Wednesday, was up $1 per barrel to $111.00. The previous session, Brent fell $1.14. 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. oil benchmark settled up $1.08 at $102.29. 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 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.

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