A Review of Crude Oil Prices Forecasting using Hybrid Method

Abstract

Crude oil is considered as a crucial energy source in modern days. Consequently, the fluctuation of crude oil prices can cause a significant impact on economic activities. Researchers have proposed many hybrid forecasting models on top of single forecasting methods which are utilized to predict crude oil prices movement more accurately. Nevertheless, many limitations still existed in hybrid forecasting models and models that can predict crude oil prices as accurate as possible is required. The motivations of this review paper are to identify and assess the mostly used crude oil prices forecasting methods and to analyse their current limitations. 12 studies that used “decomposition-and-ensemble” framework was selected for review. Wavelet transform is identified as the mostly used data decomposition method while some limitations have been recognized. Future researches should include more studies to further elucidate the limitations in existing forecasting method so that subsequent forecasting methods can be improved.