2nd UPDATE: Dow Jones-UBS Commodity Index Adds Brent Crude In Reweighting

Dow Jones Indexes said Tuesday its main commodity index will incorporate Brent crude for the first time starting next year, underscoring the growing significance of the European oil benchmark.

Dow Jones Indexes is majority owned by CME Group Inc. (CME), which also owns the New York Mercantile Exchange, 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 Commodity Index. Brent will now account for one third of the index's crude-oil component, while WTI will account for the rest, Dow Jones Indexes said.

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 IntercontinentalExchange Inc. (ICE).

Brent crude and WTI historically have traded within just a few dollars of each other, and WTI was regarded as the most important oil benchmark off which much of the world's oil was priced. However, a supply bottleneck in the Central U.S. 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 a barrel.

As a result, many oil market watchers have come to view Brent as a more accurate gauge of global oil supply and demand. In addition, that disparity means speculators who invested in Brent reaped bigger profits this year versus those who stayed in WTI.

CME stood by WTI's validity as a benchmark.

"By giving it 65% of the crude-oil component, Dow Jones-UBS Commodity Index has reaffirmed that Nymex WTI is the benchmark of choice for the energy market," CME said in a statement.

The exchange operator had no say in the index reweighting despite its ownership stake, a spokesman said.

On Tuesday, light, sweet crude on the Nymex--commonly referred to as WTI--settled up 49 cents, or 0.6%, to $86.16 a barrel. Brent crude settled up $1.78 per barrel, 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 index.

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 billion 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.

News Corp.'s (NWS) Dow Jones & Co., publisher of The Wall Street Journal and this newswire, is a minority partner in Dow Jones Indexes.

-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com

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