Dow Jones-UBS Commodity Index adds Brent Crude
Dow Jones Indexes said Tuesday its main commodity index will
incorporate Brent Light Crude for the 1st time starting next
year, underscoring the growing significance of the European Crude
Dow Jones Indexes is majority owned by CME Group Inc. (
), which also owns the New York Merc, home to the widely cited
West Texas Intermediate Crude-Oil contract (
Previously, the WTI contract accounted for the entire Crude
Oil component of the Dow Jones-UBS Commodities Index.
Brent will now account for 33% of the index's Crude Oil
component, while WTI will account for the rest, Dow Jones Indexes
Dow Jones Indexes said Brent's growing "economic significance"
as a global benchmark, as well as production levels and
liquidity, are behind the change. Brent trades on the ICE Futures
Europe exchange, operated by rival Intercontinental Exchange Inc.
Brent Crude and WTI historically have traded within just a few
dollars of each other, and WTI was once regarded as the most
important Crude Oil benchmark off which much of the World's oil
was priced. But, a supply bottleneck in the Central US has
depressed the price of WTI for much of this year, causing the
contract to trade at a discount to Brent of as much as 26
As a result, many Crude Oil market watchers have come to view
Brent as a more accurate gauge of Global Crude Oil supply and
demand. In addition, that disparity means speculators who
invested in Brent reaped bigger profits this year vs those who
stayed in WTI.
On Tuesday, light, sweet crude on the Nymex, or WTI, settled
up 0.49, or 0.6%, to 86.16 bbl. Brent Crude settled up 1.78 bbl,
or 1.63% to 110.73.
The change is a relatively small one, given the variety of
commodities included in the Dow Jones-UBS Commodity Index.
WTI will now make up about 9.7% of the index, down from 14.7%
last year. Brent Crude will now account for 5.3% of the
Still, the change is likely to mean a shift of investor money
out of WTI and into Brent, as mutual funds and other investors
who track the index adjust their holdings.
Dow Jones Indexes said an estimated $80.2-B tracks the Dow
Jones-UBS Commodity Index.
Other commodity indexes, including the Standard & Poor's
Goldman Sachs Commodity Index, already include both Brent and WTI
in their weightings.
Paul A. Ebeling, Jnr.
News Corp.'s (
) Dow Jones & Co., publisher of The Wall Street Journal and
this newswire, is a minority partner in Dow Jones Indexes.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red
Roadmaster's Technical Report on the US Major Market Indices, a
weekly, highly-regarded financial market letter, read by opinion
makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and
stock markets since 1984, following a successful business career
that included investment banking, and market and business
analysis. He is a specialist in equities/commodities, and an
accomplished chart reader who advises technicians with regard to
Major Indices Resistance/Support Levels.