Oil edges higher in bear market as hedge fund optimism wanes

Hong Kong - Oil extended gains above $43 a barrel after a fifth weekly decline while hedge funds tempered their outlook for prices.

Though futures rose as much as 1.4% in New York Monday, they’re heading for the biggest monthly drop since July as global supply swells. Commodity Futures Trading Commission data on Friday showed money managers cut their net-bullish positions on West Texas Intermediate to the lowest in 10 months during the week ended June 20 and boosted wagers on falling prices to the highest this year.

Oil in New York and London tumbled into a bear market last week on concerns that expanding global supply will counter the impact of output cuts from the Organisation of Petroleum Exporting Countries and its partners including Russia.

US crude drillers added rigs for a 23rd straight week, the longest stretch in three decades, according to data Friday from Baker Hughes.

"There is scope for oil markets to tighten over the rest of the year," Kerry Craig, global markets strategist for JPMorgan Asset Management, said in a Bloomberg television interview.

"As those prices stay weak, certainly some of those companies start adjusting their outlook for capex and investment and that slowly actually does start to bring rebalance into the market."

WTI for August delivery climbed as much as 59 cents to $43.60 a barrel on the New York Mercantile Exchange, and was at $43.48 at 11:33 in Hong Kong. Total volume traded was about 25% above the 100-day average.

The contract rose 27 cents to $43.01 Friday. Prices lost 3.9% last week and are down about 10% this month.

Brent for August settlement gained as much as 62 cents to $46.16 a barrel on the London-based ICE Futures Europe exchange. Front-month prices also lost 3.9% last week.

The global benchmark crude traded at a premium of $2.59 to WTI.