The FINANCIAL — The Reuters-Jefferies CRB index, a key gauge for commodity investors, will make no change to its components or weights next year, opting not to include Brent crude as one of its chief rivals did.
The S&P GSCI and the Dow Jones-UBS, both larger funds with tens of billions of dollars in tracking funds, have reduced exposure to the US-based West Texas Intermediate crude on their commodity indexes for 2012 after that market sharply lagged London's Brent most of this year.
DJ-UBS will introduce Brent on its index for the first time next year while S&P GSCI will be raising its allocation to the European-traded oil for a second straight year.
RJ/CRB, however, decided earlier this year to retain a 23 per cent weighting for the New York Mercantile Exchange WTI contract and continue to exclude Brent, said Florian Fischer, Thomson Reuters' Global Product Manager for the index."The decision not to include Brent did not relate to the narrowing or widening of the spread at this point," Fischer said.
"Rather, for the purposes of the index, it was felt that WTI continued to be the right contract to reference, while the developments between the two contracts will be actively watched."
He said the decision was made in June — though not made public at the time — and will not be reviewed again until next year.
For years, the Brent-WTI difference was well below $5 a barrel, with the US product often priced higher due to its standing as the global benchmark for oil.
That changed since the start of this year after a glut of crude in America's Midwest depressed WTI prices, causing the contract traded on the CME Group's New York Mercantile Exchange to disconnect with global market fundamentals.
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