UPDATE 1-Shell less sure speculation causing volatile oil

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By Alex Lawler

LONDON, July 31 (Reuters) - Royal Dutch Shell Plc (RDSa.L)'s chief executive said on Thursday he was less sure volatile oil prices are being caused by speculation, a factor blamed by many producers for oil's record bull run.

Shell, the world's second-largest fully publicly traded oil company, had previously said that increased flows of investor money into oil was boosting prices, rather than other factors such as supply and demand.

"We felt the increased amount of money going into the forward markets played a role," Shell CEO Jeroen van der Veer said. "On further studies, we are getting less sure what exactly drives this daily volatility."

Oil's rally to a record high of $147.27 a barrel on July 11 has stirred a heated debate about the role played by speculators in commodity markets. The price has since fallen to around $126.

Shell was previously rare among the world's largest Western oil firms in saying speculation was a factor affecting the price. BP Plc (BP.L) CEO Tony Hayward has said the problem is a lack of adequate supply growth.

The Shell's boss was speaking after the company reported a 5 percent rise in second-quarter profit thanks to high oil prices. Shell also raised its 2008 capital spending plan.

Many producer countries, and some lawmakers in consumer nations such as the United States, have blamed speculation for oil's rally, rather than a lack of supply.