But optimism was tempered by fears that the agreement -- which extends the US Treasury's borrowing authority until February 7 -- is only a temporary measure and problems could resurface within months.
New York's main contract, West Texas Intermediate (WTI) for delivery in November, was down four cents to $102.25 a barrel in morning trade, and Brent North Sea crude for December dipped five cents to $110.54.
Analysts said attention will now shift to how the United States -- the world's biggest economy -- will cope with the damage of the impasse which had led to a partial shutdown of the US government.
"Congress remains bitterly divided, with Republicans arguing for low spending and taxes, Democrats for looser policy but mindful of the deficit," Singapore's DBS Bank said in a commentary.
"This means fiscal policy, whether by agreement or by dysfunctional sequestration, will remain tight. It will remain a drag on growth for another two to three years," it added.
"Bottom line? If fiscal policy is going to remain a drag on growth, at least it seems less likely to be a noose."
Phillip Futures noted that the Senate bill was only a "temporary measure".
This means that the "US economy and financial markets may have to face the same situation of government shutdown and debt default threat three months down the road," it said in a market commentary.