“Adding to his bullish outlook is the backwardation seen in the oil market, which occurs when a future contract’s price trades below the current spot price. This signals tightening in the supply, Bill Baruch, president of Blue Line Futures said in an interview with CNBC, and is also an encouraging sign.”

Related: Be Careful With Imminent Oil Catalyst

Declining prices in recent years have prompted scores of major oil producers to rein in capital spending. Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins – some say it is now profitable at less than $50 per barrel. Additionally, companies are finding easy access to credit and private-equity firms have bought out struggling companies, which have kept production flowing.

Additionally, the ETFS Bloomberg Energy Commodity Longer Dated Strategy K-1 Free ETF (NYSEArca: BEF) tries to provide long-term capital appreciation designed to exceed the performance of the Bloomberg Energy Index 3 Month Forward Index, which tracks movements in the prices of rolling positions in a basket of energy commodity futures with a maturity between 4 and 6 months.

For more news on oil ETFs, visit our oil category.