EBC Global Focus | Weak Oil Prices, Memory Shortage Troubles Cisco

Oil prices were largely flat on Friday (February 13th) and are poised for a second consecutive weekly decline, as concerns about a full-scale war in the Middle East eased and forecasts indicate supply will outstrip demand this year.

The possibility of a U.S. attack on Iran has been a factor influencing oil prices this year, though analysts say such an attack would require greater military commitment. Donald Trump stated this week that he is considering sending a second aircraft carrier to the region.

Iran expressed willingness to negotiate limits on its nuclear program in exchange for sanctions relief, while stating that talks regarding its missile capabilities are "non-negotiable".

The International Energy Agency (IEA) forecast in its monthly report on Thursday that global oil demand growth this year will be weaker than previously expected, with overall supply exceeding demand.

Data from the U.S. Energy Information Administration (EIA) showed crude inventories fell by 1.3 million barrels in the week ending December 12th, exceeding market expectations of a 1.1 million barrel draw. Gasoline and distillate inventories, however, rose more than anticipated.

The Kremlin stated it is actively discussing aid to Cuba. The Cuban leadership warned last Sunday that international flights will be unable to refuel in the country due to a shortage of aviation fuel.

WTI crude oil is consolidating above its 200-day moving average, which appears to be forming a significant support level. If a clear breakdown fails to materialize, prices are expected to rebound towards the $64 level over the next few trading sessions.

Hot Product Briefing

As of the close on February 12th, American Tower Corporation's stock led gains among EBC's main products. Several institutional investors have increased their holdings in the stock.

Cisco Systems' stock recorded its largest single-day drop since 2022, pressured by rising memory chip prices squeezing its profit margins. Strong demand from AI data centers has led to a global memory chip shortage.

Technology stocks were the hardest hit in the sell-off, with investors retreating due to concerns that artificial intelligence could disrupt the industry. Friday's Consumer Price Index (CPI) report is in focus, as the data will provide further guidance on the Federal Reserve's policy path.