Oil shifts - expect tremours - Iran and Indexes re-jig

Expect tremours in the oil markets:

click on link for full story

https://customers.reuters.com/community/newsletters/oil/InsideOil20120109.pdf

West readies oil stocks release, Iran plans war

games

By Robin Pomeroy and Peg Mackey

TEHRAN/LONDON, Jan 6 (Reuters) - Iran announced on

Friday new military exercises in the Strait of Hormuz, but

the West has readied plans to use strategic oil stocks to

replace almost all Gulf oil lost if Iran blocks the waterway,

industry sources and diplomats told Reuters.

===============================================

Oil markets brace for turbulence of index shift

By Joshua Schneyer and Matthew Robinson

NEW YORK, Jan 6 (Reuters) - Amid the drama of Iran, the

meltdown of refiner Petroplus and a wave of upbeat economic

data, it was all too easy to overlook one of the most

important short-term factors shaping oil markets this

week: the reweighting of the world's biggest commodity

indexes.

The S&P GSCI Index and the DJ-UBS Index, the world's no.

1 and no. 2 commodity indexes, announced two months

ago plans to rejig their component weights to reflect growing

trade in European benchmark Brent crude, at the expense

of U.S. WTI, which some traders say had become

detached from global prices.

The transition is now nigh: over the course of five days next

week, pension funds and investors who have an estimated

$180 billion tracking those indexes will transfer their holdings

from prompt futures contracts into later months.