The Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based ETF, and rival cap-weighted energy ETFs are extending their recent comebacks that are lifting the funds to comeback kids from bear market status.

XLE is up more than 9% this month and is close to trading above its 200-day moving average for the first time since early in the second quarter. The big-name energy ETF is now down just 9% year-to-date after previously sporting year-to-date losses of closer to 20%.

Current OPEC compliance with production cut plans remains above their historical average, and it usually takes between two to three quarters for inventories to normalize after the cuts. The challenge for energy equities is that some oil market observers see more declines coming for crude. Oil traders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices.

“U.S. production is highly responsive to market conditions,” reports ETF Daily News. “Therefore, U.S. producers are pulling in their horns in face of prices under $60. That’s more fuel for a price surge. So, when you get down to it, OPEC has a secret weapon all right. And that’s the fact that U.S. oil production is way too price-sensitive for the good of U.S. oil consumers.”

Related: Energy Sector ETFs Are Breaking Out

Citigroup also projects a greater likelihood of persistent shortage of oil than a big jump in supply over the coming quarters. Ed Morse, global head of commodities at the bank, said that a handful of Organization of Petroleum Exporting Countries might already be pumping at maximum capacity already, and due to weak investment in exploration and development, there is a greater risk of a market squeeze once demand picks up, especially from a growing Chinese economy.

“Some people will say that OPEC can and will always pump more. After all, no one knows how to let greed get the better of them than OPEC,” according to ETF Daily News. “In fact, five OPEC members – Iraq, Iran, Libya, Nigeria, and Venezuela – may already be pumping at their maximum capacity. That’s according to a new report from Citigroup. Citigroup believes this fact is sowing the seeds for oil prices to squeeze higher – potentially much higher – as soon as 2018.”

For more information on the oil market, visit our oil category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.