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UPDATE 7-Oil up 2 pct despite U.S. crude build; set for best Q3 since 2004

* Brent crude set for Q3 rise of nearly 16 pct

* U.S. crude stockpiles jump, distillates see draw- EIA

* Iraqi oil minister suggests more output cuts possible (Updates throughout, adds quotes, updates prices, Changes byline and dateline from LONDON)

NEW YORK, Sept 20 (Reuters) - Oil prices rose nearly 2 percent on Wednesday, despite a rise in U.S. crude inventories, with the market heading for its largest third-quarter gain in 13 years after the Iraqi oil minister said OPEC and its partners were considering extending or deepening output cuts.

Brent crude futures rose $1.06, or 1.9 percent, to $56.20 a barrel by 12:19 p.m. EDT (1619 GMT), while U.S. West Texas Intermediate (WTI) crude futures gained 91 cents, or 1.8 percent, to $50.39.

Crude prices were on course for a rise of nearly 16 percent this quarter, which would make this year's performance the strongest for the third quarter since 2004.

U.S. crude oil stockpiles jumped last week as imports and production increased, the U.S. Energy Information Administration said, as operations resumed from the impact of Hurricane Harvey which hit the Gulf Coast on Aug. 25.

Crude inventories rose for a third straight week, building by 4.6 million barrels, about a million more barrels than forecast.

"The impact of Hurricane Harvey can still be seen in todays larger-than-expected build in the U.S. commercial crude stockpile," said Abhishek Kumar, Senior Energy Analyst at Interfax Energys Global Gas Analytics in London, "However, this has had limited impact in dissipating the bullish sentiment prevailing in the market.

Gasoline stocks fell 2.1 million barrels, in line with analysts' expectations while distillate stocks inventories fell 5.7 million barrels, the biggest weekly draw since November 2011.

On Friday the Organization of the Petroleum Exporting Countries and other producers meet in Vienna to discuss the progress of their deal to limit output.

The group is considering a range of options, including an extension of cuts, but it is premature to decide on what to do beyond the agreement's expiry in March, Iraqi oil minister Jabar al-Luaibi told an energy conference on Tuesday.

OPEC and non-OPEC producers including Russia have agreed to reduce output by about 1.8 million barrels per day (bpd) until March to reduce global oil inventories and support prices.

Some producers think the pact should be extended for three or four months, others want it to run until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.

"Theres been some general support on that upcoming meeting," said Tony Headrick, energy market analyst at CHS Hedging.

The market will be monitoring that closely, to see if theyre including Nigeria and Libya," he said, "Cuts have been relatively well implemented recently and early thoughts are that theyre going to maintain those cuts."

(Additional reporting by Amanda Cooper and Christopher Johnson in LONDON, Aaron Sheldrick in TOKYO and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and Louise Heavens)