Modelling Monthly Sales of Crude Oil Production in Nigeria

Abstract

Changes in the price of crude oil around the world have always been the main topic of economic and financial news. Changes in the price of oil on the world market have a direct effect on the prices of retail oil products and consequently on all and sundry. This present research aims at developing a time series model that could observe and predict sales of crude oil production. The secondary data used in this study was the monthly sales of crude oil production for eleven years, which resulted in a usable sample of size 132. The plot of the raw data over time shows a non-stationary series with a downward trend. With non-stationarity observed, the series was differenced twice before obtaining stationarity. The ARIMA model with optimum p, d and q was found to be (0, 1, 1) (0, 0, 2), and the ARIMA model was used to predict sales of crude oil between 2021 and 2025. The study revealed that the forecast for the series shows that will keep going down until 2025 before it becomes stable. The study recommends that government should pay attention to variables affecting crude oil production and circulation in other to aid increase in the volume produced and amount sold.