Modeling and Forecasting Crude Oil Price: Implications for the Nigerias 2013 Budget Proposal

K. J. Akomolafe, Jonathan D. Danladi

Abstract: This work is an attempt to forecast crude oil price for 2013 using Box and Jenkins Methodology. It is to advise Nigeria on the oil price benchmark for her budget using the Auto-regressive [AR (2)] model which is found to be most appropriate. The diagnostics tests show that the model is good. Based on the model, a forecast is conducted for year 2013, and it shows that the price level will be stable around $100. A benchmark of $80 per barrel is recommended given the nature and structure of the Nigerian economy (being solely oil-dependent) as well as given the expected vagaries in the international price of crude oil

Keywords: Nigeria, Crude Oil Price, Box and Jenkins Methodology