Typo by top commodity index sows oil market confusion

Tue Nov 6, 2012 11:57pm GMT

* 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.   Continued...

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