Dislocations highlight risks of commodity ETNs

Notes face scrutiny after problems with Barclays’ OIL and GAZ products

ETNs provide investors with access to commodity markets, but may have structural issues

Early this year, strange things started happening to one of Barclays' popular exchange-traded notes (ETNs) for tracking the price of oil. The iPath S&P GSCI Crude Oil Total Return Index ETN – better known as OIL, its ticker on the NYSE Arca exchange – started trading at a huge premium to its underlying index. In the three weeks from December 31 to January 20, the index plunged 35% while the market price of OIL fell just 12%.

It is unlikely that most investors noticed the dislocation, though, unt