OPEC Spare Capacity and the Term Structure of Oil Futures Prices

This article looks into whether we can parsimoniously explain whether holding long futures positions in crude oil is a wise decision or not. It turns out that whether OPEC spare capacity is at comfortable levels or not would have been very helpful in making this decision, at least since the 1990s. Given the strength of this historical relationship, we can then speculate that it may be wise to examine current levels of OPEC spare capacity before deciding upon structural crude oil futures positions.