Oil market swings worry US more than price

* U.S. to study financial institutions' role in price swings

* U.S. energy secretary meets with Saudi oil minister

* Developing world steps in as rich nation oil demand falls

By Souhail Karam

RIYADH, Feb 22 (Reuters) - Big oil price swings are more of a worry for top consumer the United States than the outright price, U.S. Energy Secretary Steven Chu said on Monday on a visit to top exporter Saudi Arabia.

Chu declined to comment on what decision he thought OPEC should take when it meets to discuss oil policy next month. He earlier met Saudi Oil Minister Ali-al Naimi where they reviewed the oil market, the first of three meetings Chu has scheduled with OPEC oil ministers on a visit to the Gulf this week.

"Whatever the price, you don't want sudden changes, this is very important," Chu told reporters at a press event in Riyadh. "Its very hard for the economies of the world to adjust to sudden changes... it's very difficult to make plans, for investments in oil production over five to 10 years."

The U.S. planned to review the role of financial institutions in oil price swings, he said.

"We are going to be undergoing studies to try and find out how much has the volatility been increased by large financial institutions taking positions," he said.

"Certainly the volatility of the price seems to be far in excess of demand and supply."

The U.S. Commodities and Futures Trading Commission last month unveiled proposals to limit the size of bets on oil prices that traders and investors can make.

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A steep fall of over $110 a barrel in the oil price in 2008 caused delay and cancellation to many energy projects, leading Naimi to warn of a future supply crunch when energy demand began to recover from recession.

The price has since recovered to around $80 a barrel from a low of just over $32 a barrel in December 2008. It touched a six-week high earlier on Monday, and has traded in a relatively tight range of $69-$80 a barrel since October.

Chu declined to say whether current oil supplies were sufficient for the global economy, but warned of the need to avoid anything that may reverse a fragile recovery.

"Everybody says that climbing out of this deep recession is fragile so one has to be very weary of throwing back in," he said.

CONTRAST

Chu emphasised the need to tackle global warming through renewable energy and conservation in a speech at the International Energy Forum, an institution established to foster debate between oil consumers and producers.

The kingdom and the U.S. were aligned on the need for energy conservation, Chu said. Naimi last year talked of the need to slow the rapid energy demand growth in the world's top oil exporter, but fuel prices remain subsidised giving consumers little reason to burn less.

Oil demand was unlikely to change much in coming decades he said, as consumption in growing emerging economies replaces falling demand in rich nations.

Chu's reluctance to publicly discuss OPEC and oil prices was in contrast to the tone taken in trips to the kingdom by previous U.S. administrations.

Former President George W. Bush visited the U.S. ally twice in the run up to record oil prices in 2008 and pushed for higher supplies. On his second visit, the kingdom made a modest increase in output.

The last Democratic Energy Secretary before Chu, Bill Richardson, openly lobbied OPEC producers on oil policy, and once went as far as to phone the oil ministers during a meeting.

Chu is scheduled to meet the oil ministers of OPEC members the United Arab Emirates and Qatar on Wednesday and Thursday. (Writing by Simon Webb; editing by James Jukwey)