Oil Price Forecasting based on Improved SARIMA Model

Abstract

Oil Price is important to countries and people. As Black Gold, Oil is considered the blood of the industry. People in modern cities are surrounded by crude oil and its derivatives, such as petrol for cars, plastic products for storing food, etc. Thus, the changing price of oil can have a profound effect on people and countries. The prediction of oil prices can lessen the impact. Once people and the government know the future price of oil, then people and government can adjust their behavior. This study leverages the Seasonal Autoregressive Integrated Moving Average (SARIMA) model to find the parameters of estimation and forecasts. The study uses Brent crude oil prices from May 1987 to July 2022. The study result shows that the price of oil is hard to predict based on the Brent crude oil prices. The study also discussed some protentional reasons why the SARIMA model cannot predict the price so accurately even if the method is correct.