The New York Mercantile Exchange's West Texas Intermediate crude oil futures contract traditionally has been the leading benchmark amid the U.S. position as the largest consumer of the commodity. However, the Brent crude oil futures contract is becoming the benchmark as investor positions have reached a historic high.
The reweighting of major commodity indexes could widen the spread between Brent and U.S. West Texas Intermediate crude oil. "Any market impact is likely to be minimal ... [but] the reweighting of crude oil ... could cause a degree of widening in the WTI/Brent spread," said Michael Haigh, an analyst at Societe Generale.
While JPMorgan Chase reportedly is negotiating a settlement with the Federal Energy Regulatory Commission, it appears likely that Blythe Masters, the head of the firm's commodities business, will not be charged separately with any wrongdoing, according to people briefed on the matter. The regulator could reconsider its decision, those people said, but appears not to be going forward with its contention that Masters made "false and misleading statements under oath."
Questions started arising last year about the role of West Texas intermediate crude as the foremost international indicator of oil prices after it disconnected from the global market because of a backlog. Brent crude took a more prominent role, a trend that has continued into 2012, Sarah Kent writes. Brent's access to international markets also has given it an edge over WTI.