In this paper we will analyze why the oil prices in United States of America showed a bear market trend in 2007. There were several reasons, for example, Iraq war, weather fluctuations etc, for which the prices of oil went down. Although, this trend did not signify at all that the earnings from the oil sector also went down.
In the year of 2007, the oil market in the United States of America showed a bear market trend. The oil prices came down to 44 dollars per barrel, that is, 14% decrease in that year. The war in Iraq was one of the main reasons behind the decline in oil prices.
The weather changes in US also lowered the demands for oil but the supply increased. Therefore the oil prices got lowered. During the last quarter of 2007, the oil prices decreased by 33% after being at the top in July which indicated towards a new bear market trend. In fact, there were 6 bear markets in oil. The lowest fall was 56% whereas; the average rate of bear market fall was 82%.
However, in the Gulf region, the oil prices had been showing increasing trends over the last decade. The expectations of the investors were high in that region. The local investors also did not have a fear of a bear market in oil.
This bear market trend in oil prices did not mean any shortfall in revenue from the oil sector. The regional share markets did get down, but there were every possible chances of an increase in the oil prices up within the middle of 2008.
But, at that time, the oil prices clearly showed a bear market trend, which was not at all, a good sign for the future of the US economy.