BUZZ-Oil stocks: traders look to sell rallies

** European oil and oil stocks likely to test multi-year lows again before a sustainable recovery, say traders

** Brent and WTI both fall by around 5 pct on Wednesday after rising by 20 pct in the three previous trading days, a rally sparked by a greater-than-expected reduction in the US rig count

** The 3-day rally in oil sparked a wave of index short covering that helped large-caps though with that buying support having faded sellers of the rally back in control

** Oil support services and producers among top fallers on Stoxx 600 on Tuesday: SBM, Subsea, Tullow and Premier Oil (LSE: PMO.L - news) all down by more than 5 pct

** Stoxx 600 Oil and Gas index down 1.3 pct

** BAML said in a technical note on Tuesday $45.33 level likely to be a consolidation point for WTI before renewed stalling - a call proven to be correct. Chart: http://link.reuters.com/dyh93w

** "The oil rally was sparked by hopes that all the capex cuts will lead to less supply - if that is the driver then it is negative for oil service names," said a trader at a London-based broker (RM (LSE: RM.L - news) : alasdair.pal.thomsonreuters.com@reuters.net)