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Oil Swings May Widen as Spare Capacity Shrinks: Energy Markets

Swings in oil prices may widen 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.