commodities modelling !!!!i am not sure there is a straightforward answer to the question what is the best stochastic model for oil price.and, one factor-model may be insufficient to lie good results ...here are some useful readings :"The Term Structures of Oil Futures Prices" by Gabillon is a reference paper :http://www.oxfordenergy.org/pdfs/WPM17.pdf"Energy
Commodity Prices: Is Mean-Reversion Dead?"http://www.dm.unibo.it/ssf/2008/papers_ ... Stochastic
Convenience Yield and the Pricing of Oil Contingent Claims"[Restrited access] http://www.jstor.org/pss/2328801in
"Risk Management in Commodity Markets", Geman presents a mean reversion model with structural breakshttp://www.amazon.com/Risk-Management-Commodit ... 470694254i
would advise the following book, from Geman, too :"Commodities and Commodity Derivatives: Modelling and Pricing for Agriculturals, Metals and Energy"
don't earn the least buck nor with Geman's books nor with amazon.com )