Oh, I'm sorry to hear, that your sisters baby is so sick. How much worries. I wish the best for the baby, his/her parents and your whole family, you inclusive.
I suggest, you could craft something like that
because it isn't easy for tiny little baby's to stay warm (my twin-sons were born within the 35. week with 2400 g/2700g and 41/43cm, every time they had hands cold as ice..).
Fleece helps to stay warm, even you don't know, if the baby is allergic to lanolin. I think, an acrylic yarn won't be warm enough. Something like cashmere or alpaca, not fuzzy, will be good. I hope that helps a little bit. All the best!
Ah, yes, the baby will need many warm hats and socks, too.