U.S. crude prices retreated after coming within striking distance of their 2017 high on Wednesday, raising questions about whether a rally that started in June has reached its peak.

On the one hand, the trend of future oil prices suggests that a prolonged global glut of crude is coming to an end. But at these elevated levels, prices are also susceptible to disappointing data points and profit-taking as traders look to cash in on recent gains.

Crude futures shed more than $1 a barrel on Wednesday after government data showed U.S. crude stockpiles declined less than earlier industry figures indicated. The Energy Department’s report also showed U.S. crude exports hit an all-time high, while the nation’s production crept toward record levels.

U.S crude 4-day performance

U.S. West Texas Intermediate crude prices ended the session down 8 cents at $54.30 a barrel and were trading near that level on Thursday. International benchmark Brent crude settled 45 cents lower at $60.49 and were slumping towards $60 a barrel on Thursday.

Still, in a much-anticipated development, U.S. crude futures this week flipped into backwardation over the next six months. That means prices for future delivery are less expensive than contracts to ship oil at an earlier date.

The six-month spread hasn’t closed in backwardation since November 2014, just before prices crashed, according to Roberto Friedlander, head of energy trading at Seaport Global Securities.

“That’s a real big deal. The curve is telling you that the tightening of supplies is happening,” Friedlander told CNBC. “It’s symbolically very important.”

U.S. crude futures curve in backwardation

The flip into backwardation helps to tighten the market in several ways. Traders have less incentive to hold crude in storage because they stand to make more by selling it immediately. It also prevents U.S. shale drillers from locking in higher future prices with buyers, which tends to rein in their production.

Resurgent U.S. output, fueled by higher oil prices early in the year, made it harder for crude exporters to drain brimming global stockpiles. OPEC and other producers including Russia are keeping 1.8 million barrels a day off the market in order to drive down inventories to their five-year average.

“The contango is coming out of the WTI market as inventories of crude oil and petroleum products continue to decline, and if that phenomenon continues, we’ll see a further liquidation of crude oil stocks in the U.S.,” said Andrew Lipow, president of Lipow Oil Associates, referring to the opposite of backwardation.

Analysts are hopeful that the current oil price rally will not cause U.S. energy companies to start spinning the drill bit with abandon again. That’s because many of them are signaling that they are focused on getting their finances in order rather than funding new production with mounds of debt.

“What we’re seeing comment-wise from the producers in the U.S., especially those that have reported results over the last couple of days is they are talking about more focus on returns rather than growth for the sake of growth,” said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions.

Exploration and production companies may keep spending beyond their cash flow, but so long as that outspend moderates, it should bring down the rate of U.S. production growth, she said. However, it will be harder for drillers to exercise discipline as oil prices creep towards $60 a barrel, she added.

“It’s like being on a diet. You can only be on the diet for so long. When oil’s at 60, you want the doughnut,” Essner said.

Long positions in crude oil — or bets that prices will rise — have also crept up in recent weeks, which means there is room for some healthy profit-taking.

Prices were looking too high at the start of a seasonally difficult period for oil prices, said Tom Kloza, global head of energy analysis at Oil Price Information Service. It’s not uncommon for crude futures to slump in November, when gasoline consumption drops after the summer driving season and demand for winter heating fuel has yet to ramp up, he noted.

“November has a history of being very, very cruel to these markets,” he said.