By Barani Krishnan

NEW YORK (Reuters) - Oil settled down on Tuesday after a surging dollar offset optimism over planned OPEC output cuts, before a report suggesting another weekly drop in U.S. crude stocks took prices up again post-settlement toward four-month highs.

The American Petroleum Institute (API), a trade group, reported that domestic crude inventories likely fell for a fifth straight week, declining by 7.6 million barrels. [API/S]

The U.S. government's Energy Information Administration (EIA) will report official stockpile numbers on Wednesday. Analysts polled by Reuters expect the EIA to report a stock build of 2.6 million barrels for the week ended Sept. 30. [EIA].

If the EIA reports another drawdown, "it means we can't take for granted that we're going to be seeing builds for this time of year, even though it's traditionally what we see", said Matt Smith, analyst at Clipperdata, a New York-based firm that tracks oil shipments into the United States.

"Refinery runs are higher than they were this time last year and so, we are still seeing more crude being consumed on a relative basis," Smith added.

Brent crude <LCOc1> settled down 2 cents at $50.87 a barrel, after rising to $51.37 during the session, its highest since June 10.

U.S. West Texas Intermediate (WTI) crude <CLc1> closed down 12 cents at $48.69, after hitting $49.13 earlier, a peak since July 5.

The two benchmarks rose about 40 cents each on the API data, with Brent at $51.25 and WTI at $49.19 by 5:00 p.m. (2100 GMT)

Oil has risen more than 10 percent over the past five sessions since the Organization of the Petroleum Exporting Countries revived expectations that it would limit output at its policy meeting in Vienna on Nov. 30.

"The OPEC deal looks more and more like hot air but oil's still very technically-driven," said Stig Rasmussen, senior proprietary trader at Danske Commodities in Aarhus, Denmark.

Rasmussen's next upside target for Brent was $52.86. "I imagine at that point, shale oil companies will be hedging bigger volumes for 1-2 years ahead."

U.S. shale producers were hedging future oil output at their highest levels this year, analysts at Morgan Stanley noted, as the calendar 2017 strip for crude <CLCALYZ7> hit mid-August highs of $52.29 on Tuesday.

OPEC's target is to bring its production to between 32.5 million and 33.0 million barrels per day by cutting some 700,000 bpd from a glut of about 1.0 million-1.5 million bpd estimated by analysts. The group has invited Russia and other major producers to join in making cuts.

A Reuters survey last week showed OPEC output likely hit record highs of 33.6 million bpd in September..

(Additional reporting by Karolin Schaps in LONDON, Vladimir Soldatkin in ST PETERSBURG and Henning Gloystein in SINGAPORE; Editing by David Gregorio and Cynthia Osterman)