Oil Up Second Day As Covering Support Stops Slide To 11-Year Low

Gains in oil were restrained somewhat by a firm dollar ahead of expectations that the Fed on Wednesday will announce the first increase in almost a decade. A stronger greenback makes dollar-denominated oil less affordable to euro holders.

"We remain reluctant to suggest that a long-term price bottom has been established anywhere across the complex," said Jim Ritterbusch, founder of Chicago-based oil consultancy Ritterbusch & Associates.

"Although we have shifted off of the short side of WTI following last week's drop to below 37.75, we will look to re-establish shorts into the February futures on further advances to the $41 area."

Credit ratings agency Moody's cut its 2016 Brent estimate to $43 from $53, citing oversupply.

Danske Bank said crude could hit $25 before output declines push prices back up.

Notwithstanding the global oil glut, analysts polled by Reuters estimated that U.S. crude stockpiles fell by 1.4 million barrels last week.

Industry group American Petroleum Institute (API) will issue its own stockpile report at 4:30 PM ET (2130 GMT), ahead of Wednesday's official data from the Energy Information Administration (EIA).