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Commodities Briefing - Categorized | Index, Market Moves more

Commodity indexing embraces new methods

Posted on 20 August 2015

It was 2012, and energy executives and policy specialists were excited by the promise of shale gas. From Texas to Pennsylvania, a bonanza was under way. But inside the downtown Manhattan offices of S&P Dow Jones Indices, record US gas production was causing a problem. Oversupply was filling storage caverns, reducing returns from futures contracts for the product, disrupting an important benchmark used by investors.
The total return version of the S&P GSCI gas index had collapsed to a value of 0.58 from 100 when it launched. “The index value had declined to such a low level that it became prohibitive for people to price products on it,” recalls Michael McGlone, a former S&P senior director of commodity indexing. “It’s difficult to track an index that’s priced at less than one.”……………………………………….Full Article: Source


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