Oil Swings to Worsen as Spare Capacity Shrinks: Energy Markets - BusinessWeek: "Swings in oil prices may worsen over the next five years as OPEC’s shrinking spare production capacity increases traders’ concern about supply shortages.
Oil’s 50-day historical volatility, a measure of how much crude fluctuates around its average price, was at 34 percent on June 25. The measure rose to a record 108 percent in January 2009 after OPEC’s spare production capacity fell to its lowest in almost four years. The group’s idled capacity may drop to 3.9 percent of world demand by 2015 from 6.8 percent this year, according to International Energy Agency estimates...
... OPEC, supplier of 40 percent of the world’s oil, pumped 29.4 million barrels a day in May, with capacity of another 5.5 million barrels idled, according to data compiled by Bloomberg. The group’s spare capacity was as low as about 2 million barrels a day in July 2008, when oil prices peaked, before tumbling as the global recession crimped energy consumption.
Spare production capacity will drop as supplies from outside the group fail to keep up with demand, according to the IEA. The agency estimates world oil usage will rise 6.4 percent by 2015 to 91.93 million barrels a day, while output, excluding OPEC crude, will increase 3.7 percent. That means the world will need more of the group’s oil to meet demand..."