FUND VIEW-Speculation not to blame for oil spike

LONDON, June 13 (Reuters) - A volatile trading environment and a tight balance between global supply and demand are causing the oil price to spike, an energy fund manager said.

Tom Nelson, analyst for Guinness Global Energy Fund, said on Thursday blaming speculators -- investors with no desire for the underlying physical commodity -- for oil's meteoric rise was unfounded.

"Frankly, we think that's wrong. There are some very clear, tangible reasons that have caused this oil spike," he said.

"We were supposed to see non-OPEC supply growth in 2008, and we're not seeing nearly as much as was forecast. Russian production is declining," he said.

Nelson estimated that in recent years the amount of investor cash in major commodity indexes had grown to around $250 billion.

"Added to that, yes we have seen very substantial flows from institutional investors into commodity funds," he said.

The Guinness Global Energy Fund was launched at the end of March by Tim Guinness, formerly of Investec, and manages $70 million of investment in energy equities.

Nelson said he did not expect the upcoming producer-consumer meeting in Jeddah, Saudi Arabia to provide any tangible relief to the market, and that volatility was an inevitable side effect of a hypersensitive trading environment.

"The market forces/human nature/fear and greed part is an intangible, unpredictable, volatile thing that you can't really quantify," Nelson said.