LONDON (AFP) - World oil prices rallied on Wednesday, mirroring a turnaround for equities, after United States lawmakers finally struck a deal aimed at avoiding a default of its debt.

New York's main contract, West Texas Intermediate (WTI) for delivery in November, jumped US$1.36 to US$102.57 a barrel.

Brent North Sea crude for November climbed 96 cents to stand at US$110.92 a barrel in late London trading.

Senate Majority Leader Harry Reid on Wednesday said that a deal had been reached with Republican leaders to end a fiscal impasse that has threatened the United States with default.

Senator Reid, speaking from the Senate floor, said the agreement called for reopening the federal government with a temporary budget until January 15 and to extend US borrowing authority until February 7.

"The compromise we reached will provide our economy with the stability it desperately needs," Sen Reid said.

Senator Mitch McConnell, the top Republican, followed, confirming the agreement, which has to be approved by both the Senate and the Republican-controlled House.

US borrowing authority was on track to expire at midnight local time on Wednesday, and without an agreement the United States runs the risk of a default with potentially devastating consequences.