O que é Schwartz–Smith model?

The Schwartz–Smith model writes the log spot price as the sum of a short-term deviation $\chi_t$, an Ornstein–Uhlenbeck process reverting to zero at speed $\kappa$ with volatility $\sigma_s$, and a long-term level $\xi_t$, a Brownian motion with volatility $\sigma_l$, the two correlated by $\rho$. Its forward curve moves as

so that $\ln F(t,T) = \ln F(0,T)+e^{-\kappa(T-t)}\chi_t+\xi_t-\tfrac12V(t,T)$ with $V$ the variance. Seasonality sits in the initial curve $F(0,T)$, which the model fits exactly.