By Barani Krishnan
NEW YORK (Reuters) - Oil rose on Tuesday as a weaker dollar propped up commodities priced in the currency, but gains were limited by fears of another large build in U.S. crude stocks and that the seven-month long selloff in oil has yet to peak.
A Reuters poll of four analysts on Monday found that U.S. crude stocks grew by 3.8 million barrels, on average, in the week to Jan. 23, adding to the previous week's build which was the biggest in 14 years. [EIA/S]
The American Petroleum Institute (API), an industry group, will release its weekly inventory report at 2130 GMT. Official stockpile data for the Jan. 23 week will be issued on Wednesday by the government's Energy Information Administration, or EIA.
"It looks like crude is trying to stabilize out here in the mid-$40 level, thanks to the weaker dollar," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York.
"But I do feel that any rallies that we see between now and tomorrow are going to be sold into. The EIA report that is going to come out on Wednesday is likely to show a very large build."
Benchmark Brent oil's front-month contract
The dollar retreated from a 11-year high in the previous session, falling about 1 percent to the euro <EUR/USD> after weaker-than-expected orders for U.S. durable goods in December. [USD/]
Volumes in oil were light, with many traders in New York working away from their desks after a blizzard swept across the northeastern United States. The storm dropped more than a foot (30 cm) of snow across Massachusetts and Connecticut even as its impact on New York City fell short of dire predictions.
Oil prices have slumped nearly 60 percent since peaking in June, driven lower by ample supplies from the U.S. shale oil boom and the Organization of the Petroleum Exporting Countries' decision not to cut output.
OPEC Secretary-General Abdullah al-Badri said on Monday prices may have bottomed after the seven-month selloff, and warned of a possible spike to $200 a barrel.
But energy market analysts at investment banks remain bearish on oil, with Swiss bank UBS saying on Tuesday it could take several years for prices to recover. UBS lowered its 2015 forecasts for Brent to $52.50 a barrel and WTI to $49 a barrel.
"We do not forecast oil prices to reach $90/$85 Brent/WTI until 2018," the bank said in a note to clients.