Oil prices have had a very good run for several months now. Dating back to the recent low reached June 21, WTI is up an impressive 35% to a new two-year high. Crude hasn’t traded at $57 since June 2015.

During this latest increase, the oil futures curve has finally achieved backwardation (which isn’t necessarily permanent). The long-awaited normalization is as of now nearly complete. There is still some contango lingering in the front months, if only through the April 2018 contract (the Dec 2017 is now the front month).

The oil curve gives a few clues that all is not well despite the big price gains recently. Reminiscent of what was supposed to happen with the UST curve, but didn’t, the WTI curve in achieving backwardation should have risen in unison first, but it didn’t. The back end remained anchored in the low $50’s like the long end of the UST curve remained anchored in the 2% to 3% range.

It suggests the global oil market is actually balancing – nowhere near full recovery. There are several key aspects of the WTI futures market that are consistent with that view.

On the plus side, Money Managers have expanded their net long position. Typically, managers are the primary movers for the WTI price, and curve, in the US crude market. However, going back to the oil crash in late 2014, their hold on price movements has weakened, often noticeably.

Even at $57, that is quite a bit below what we might otherwise expect of oil prices given how long Money Managers have become again. Just as earlier this year when this segment of the futures market went record long, there are clearly offsetting positions that are keeping these oil advances contained.

The primary opposite was and is that of the oil Producers. Their involvement in the futures market is often related to hedging their product, both what is going to be extracted out from the ground in the future as well as the oil that already has been but is sitting in storage largely in Oklahoma.

In recent weeks, producers have been reducing their futures participation (less net short) over and above the reduction in oil stocks. It is a signal that producers are viewing, and trading, the backwardation in the oil curve for its anchoring at this price range. The last time they cut their hedges to this degree was in 2013 right near the top in WTI.

At that time it was also expected that oil markets had achieved balance in the “recovery” finally from the Great “Recession”, the widespread belief in the series of QE’s. The difference then to now, obviously, was WTI often trading spot above $100 and at that particular point $110.

Not only are Producers acting on perceived oil balance here, Swap Dealers just went record short this (latest) week. At a net 424.5k contracts short, that’s just a bit more to that side than was traded at the last peak – also in 2013, again, the last time crude fundamentals were as closely balanced.

There are fundamental reasons why this might be happening. Oil inventories despite the interjection of Hurricanes Harvey and Irma are still highly elevated this late into 2017. They are improved, to be sure, less now than in comparison to 2015-16, and about equal to the first crude build in 2014-15, but that’s not really close to normal stock levels.

Gasoline draws have been significant enough, especially with the pipeline disruptions after Harvey, to almost normalize gasoline stocks, but that hasn’t led to a further draw in crude to make up for the difference. That’s another signal that fundamentals are perhaps closer to equilibrium, or what counts like one.

It appears as if the crude oil market is preparing for crude normalization at a “new normal” rather than the expected and badly needed old normal. Obviously, this doesn’t necessarily mean crude prices have reached their near-term limit, not with Saudi Arabia and the rest of the oil-producing Middle East unnerving traders with each passing day. The dangers of an overseas production and supply disruption are not trivial, so a geopolitical premium might be appropriate here.

The macro factors of oil, however, aren’t really favorable for much more than that. The Commitment of Traders in especially Producers and now Swap Dealers over and above Money Managers seems to suggest broad market agreement with that view.

Like the economy, the crude market is clearly improved fundamentals to price, and is on an upswing though one that is limited and substantially less than prior upswings. Positioning suggests, as economic data does, important expectations for limited capacity beyond this point.