LONDON, Oct 31: IPE Brent crude oil futures rebounded in technical short-covering on Friday after testing new one-month lows on the back of US fuel stock builds, but traders said the rally would not last long.

By 1610 GMT, December Brent was up 32 cents, trading at $27.42 after hitting a new one-month low of $26.75 on Thursday. NYMEX December crude also traded higher at $28.72, up 25 cents.

Traders said the market was recovering from Thursday’s lows spurred by US government data showing builds in crude and winter heating oil for the third week running, but warned there would be a downward trend after this correction.

“The market was a little over-sold, so there’s been some short covering and profit-taking,” one trader said.

But some traders said the market is finding a new range which will meet strong resistance at $28, after December Brent slipped below a $28-$29 band it had held for two weeks.

A Man Financial report said this week’s figures have put an end to the notion that low inventories are an ongoing bullish prop for prices and said markets will be weighed down by technicals.

“The deteriorating technical picture could induce funds to pare longs and/or initiate fresh short positions, thus pressuring the markets even further,” the report said.

But traders said funds were not hugely active on Friday. “They were long yesterday, I’m sure they’ll be less long on Monday, but they won’t be short,” another trader said.

Traders said the impending November 1 Opec crude production cut of 900,000 barrels a day had already been factored into prices and would not provide a bullish push.

The cartel’s crude basket price slipped back into it $22-$28 range on Tuesday after 13 days above the band, removing any doubt that the cut would go ahead on Saturday. The market also appeared to be immune to news of day-to-day developments in Iraq, traders said.—Reuters