Paper Title
A Study on Forecasting of Crude Oil Price Instability
Abstract
Crude oil is a valuable nonrenewable liquid fossil fuel resource that is drilled out of the ground that used for many purposes namely transportation, heating and goes as far as electricity generation. Due to the nature of crude oil in the world and its impact of both developed and developing countries it is of great importance to study and forecast the prices of crude oil. This research would also help to understand what models have been used to identify the important factor while forecasting the cure oil prices in future. The study uses data of oil prices 20 years beginning from 2001 to end of 2020 from yahoo finance to analyses. The GARCH model was the best model to use as it ensured data had normal distribution, no serial correlation and no ARCH effect. Based on our finding the objectives of the study and have been met and able to advise what model best suits the purpose of exploring the current global scenario of Crude Oil Prices. It is strongly concluded in the study that the GARCH (1 1) model which has been used to understand the forecasting the crude oil price volatility which is a good and best fitted to forecast the crude oil prices.
Keywords - Crude Oil, Prices, ARCH, GARCH (1 1), Normal Distribution and Correlogram