Prediction of Oil Prices Using Neural Networks

In: Computers and Technology

Submitted By BlueNotebook
Words 3399
Pages 14
Oil Price Prediction using Artificial Neural Networks
Author: Siddhant Jain, 2010B3A7506P Birla Institute of Technology and Science, Pilani

Abstract: Oil is an important commodity for every industrialised nation in the modern economy. The upward or downward trends in Oil prices have crucially influenced economies over the years and a priori knowledge of such a trend would be deemed useful to all concernd - be it a firm or the whole country itself. Through this paper, I intend to use the power of Artificial Neural Networks (ANNs) to develop a model which can be used to predict oil prices. ANNs are widely used for modelling a multitude of financial and economic variables and have proven themselves to be a very powerful tool to handle volumes of data effectively and analysing it to perform meaningful calculations. MATLAB has been employed as the medium for developing the neural network and for efficiently handling the volume of calculations involved. Following sections shall deal with the theoretical and practical intricacies of the aforementioned model. The appendix includes snapshots of the generated results and other code snippets.

Artificial Neural Networks: Understanding To understand any of the ensuing topics and the details discussed thereof, it is imperative to understand what actually we mean by Neural Networks. So, I first dwell into this topic: In simplest terms a Neural Network can be defined as a computer system modelled on the human brain and nervous system. Wikipedia elaborates on this definition as follows: “ An Artificial Neural Network, often just called a neural network, is a mathematical model inspired by biological neural networks… …In most cases a neural network is an adaptive system that changes its structure during a learning phase.” Both of these definitions stand correct in their own place and the context. In my understanding the…...

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