Three On A Match: What's Driving Oil Prices?
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YouTube has great algorithms.
Not as good as the ones on Snapchat or TikTok from what I hear, but I was born too late for those apps and thus restrict myself to the age-appropriate way of jacking video straight into my occipital lobe.
And they’re good enough, regularly serving me up a steady stream of classic SNL, drumming videos, and ‘Mad Men’ clips.
Oh YouTube, you get me. But I digress.
Last week the algos pitched me a clip from the number four show on Rolling Stone’s “100 Greatest TV Shows of All-Time” list entitled, “Sterling on War”, a list, by the way, that I take great exception to for a series of unforgivable blunders, not the least of which entail ranking “The Daily Show” above “Curb Your Enthusiasm,” “Star Trek” below “The West Wing,” and the ultimate shanda, placing “The Twilight Zone” below everything else.
But I digress.
Sophisticated, soused, and sitting around the kitchen table, Roger, Don, and Betty simultaneously unsheathe their respective Pall Malls and Marlboro Reds as Sterling embraces his role as lead igniter.
Roger: I’ll get hers, you get your own. Three on a match.
Betty: I never understood that. Is that like three on a horse?
Roger: Trench war. First war. They used to say, "First man lights up, they notice you. Second man, Jerry takes aim. Third one... Auf wiedersehen."
And with that, the home viewer receives a precious factoid, suitable for cocktail parties, bar bets, and Twitter.
If only Birdie knew that come season 7, episode 13 – “The Milk and Honey Route” – she’d receive a devastating lung cancer diagnosis, perhaps she would pass on that cigarette.
But I digress.
Leave it to Don to be a buzzkill.
But the professional wisdom says that one of our guys came up with that, as a way to sell matches.
A downer, yes, but he isn’t totally wrong.
The superstition is alleged to have been invented in the late 1920s by Swedish match tycoon Ivar Kreuger, in, as Don alleges, an attempt to get people to use more matches.
Kreuger himself is a fascinating character. A civil engineer, financier, entrepreneur, and industrialist, he built a global empire in the match business and used the proceeds to found more than twenty other companies.
He was also a financial innovator, inventing among other things, B-shares, convertible gold debentures, binary foreign exchange options, and American Certificates, which continue to be used today in the form of ADRs.
But I digress.
Yet, despite all his wonderful accomplishments, Kreuger can’t claim “three on a match” on his resume.
You have to go farther back, to 1916, and the novel “The Wonderful Year,” which explains that the saying comes from a Russian funeral ritual in which three alter candles are lit by the same taper, an act of impiety, considered unlucky.
Recite that piece of trivia at your local Elk’s Lodge and you’re gold.
Unless an old-timer happened to read the 1894 article by John G. Burke, a captain in the U.S. Army and chronicler of the Old West, in which he described a popular superstition among the Mexican population of the Rio Grande that posited “If three men light their cigarillos from the same match, bad luck will surely overtake one of them soon.”
This past week I co-hosted a Twitter Spaces with my friend Joe Fahmy. Over the course of four hours we had more than 8500 participants, the vast majority of which wanted to discuss their theories on where oil prices were going and what was driving them.
From the Covid lows, oil rallied 300%, before leveling off and basing sideways for six months into late 2020.
The justifications for this run put forth by the financial media ran the gamut.
Oil jumped nearly 20% on Thursday, accelerating its recent rally as the Street eyed continued production cuts and rising U.S.-Iranian tensions. CNBC
A price war in crude oil sparked by Saudi Arabia has been a key catalyst, with coronavirus-driven macro fears another cause. Nasdaq
Oil is up more than 30% since the end of October on optimism about a sustained recovery in demand as the world gets vaccinated. Bloomberg
Oil then broke out at the end of 2021 and went on a 120% run.
Along the way we got this from The New York Times in October of 2021.
Driving in the United States and Europe is picking up a little. Refineries in China are buying more oil as that country’s economy reopens. Saudi Arabia and Russia ended their price war and slashed production, and American oil companies are decommissioning rigs and shutting wells.
And this from Reuters on January 12th, 2022.
Oil prices that rallied 50% in 2021 will power further ahead this year, some analysts predict, saying a lack of production capacity and limited investment in the sector could lift crude to $90 or even above $100 a barrel. Though the Omicron coronavirus variant has pushed COVID-19 cases far above peaks hit last year, analysts say oil prices will be supported by the reluctance of many governments to restore the strict restrictions that hammered the global economy when the pandemic took hold in 2020.
This piece was published just over a month before Russia invaded Ukraine. Try finding the last word of that sentence linked to the rise in oil prices in any news before early February of 2022.
But that’s the reason du jour we’ve been given over the past 5-months for the volatility in oil prices, which rose only 35% post-invasion and are exactly where they were on February 24th - the day Russia entered Ukraine.
Why did oil rise 1300% in under two years?
Where did the saying “three on a match” come from?
The answer to both is the same.
Pick the story of your choice.
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Nothing written, expressed, or implied here should be looked at as investment advice or an admonition to buy, sell, or trade any security or financial instrument. As always, do your own diligence.