* Dow Jones Indices cut Brent's share, raised WTI's before correcting
* Mistake may have cost the company some credibility, say analysts
By Barani Krishnan and Claire Milhench
Nov 6 (Reuters) - The world's leading financial index group sowed hours of confusion in global oil markets late on Monday when it accidentally reversed the new crude oil weightings of the top commodity index, the S&P GSCI.
S&P Dow Jones Indices, owned by McGraw Hill unit Standard & Poor's, said on Tuesday that it had inadvertently mislabeled a table showing how investors should allocate an estimated $80 billion of funds that track the index for 2013. The new weights were listed under a "2012" heading, while this year's were listed as new figures for "2013."
While most of the 24 component weights were little changed, the two most actively traded contracts - WTI and Brent crude - saw significant changes that will force investors to shift some $8 billion from one to the other when the rebalancing takes effect in early January.
The mistaken data, which was initially published by agencies including Bloomberg News and Reuters, may not have fooled investors who follow the index closely.
But the news did affect markets, with the key Brent/WTI spread widening by $1 a barrel as traders reacted to the corrected information, which was released two hours later. The episode threatens to diminish faith in S&P at a time when a series of glitches across markets have rattled investors.
"You're talking about what is effectively the world's largest commodity index. For them to send out something like this without thorough checking is truly surprising," said Sean McGillivray, head of asset allocation at Great Pacific Wealth Management in Oregon.
In the original release, a table of production weights showed CME Group's U.S. WTI crude contract with a target of 30.96 percent, some 6.25 percentage points more than listed for 2012. It showed IntercontinentalExchange's Brent would be cut by 4 percentage points to 18.35 percent.
It would have been a surprising reversal of the recent trend among indices to boost the weighting of the Brent contract, which has grown its share of oil derivatives trading.
But in fact, just the opposite was true. The total 10 percentage point change has a notional value of some $8 billion.
S&P realized it had mislabeled the table about two hours later, and posted a corrected version on its website.
"Apparently ... the (first) percentage weight table had the incorrect heading. 2012 and 2013 were reversed," Dave Guarino, spokesman for Dow Jones Indices, told Reuters in an email on Tuesday.
Later, in a telephone call, Guarino said the index provider had not received calls from investors or companies that use the S&P GSCI as an investment benchmark or guide.
Many of the big users may have learned of the change days or weeks earlier in private meetings, says David Hemming, commodities portfolio manager at Hermes Fund Managers.
"Most managers would have been either in the index committee meetings or seen the notes from those. It was almost exactly a month ago," he said. "I doubt there would have been any trading off the back of that until that aspect had been cleared up."
But the news was not known to the wider market, which reacted overnight and into Tuesday, even though the new weights do not take effect until the first part of January.
The original, erroneous news release came out on Monday at around 5:30 p.m. EST, when U.S. oil futures markets are closed.
But after S&P published the corrected version, two hours later, the spread between Brent crude and WTI widened by more than $1 a barrel in just 30 minutes. By late on Tuesday, the spread was up 50 cents on the day at $22.58 a barrel.
"For sure, the index change adds to support for the Brent/WTI spread," said John Kilduff, partner at Again Capital LLC in New York.
Hemming said most investors would also have anticipated a shift in favor of Brent, which has seen significantly higher trading volume relative to WTI due to a growing preference among some energy companies to use the European benchmark. The GSCI takes into account futures trading liquidity when it allocates weights between similar types of commodities, such as oil.
He said the bigger surprise came last month when the UBS-Dow Jones index - also now owned by S&P Dow Jones Indices - decided to include Kansas City wheat and Chicago soybean meal in its index, taking it to 22 commodities.
Some faulted S&P more for failing to move the GSCI index - created decades ago by Goldman Sachs and later sold to Standard & Poor's - faster in favor of Brent. That said, the GSCI still has by far the largest weighting toward Brent. The DJ-UBS, for comparison, has only 5.8 percent Brent weight.
Jeremy Charlesworth, chief investment officer at Moonraker Fund Management, said big investors would not have been fooled.
"Most managers would have thought: They've got that wrong!" he said.