OIL-PRODUCING nations are getting a double benefit from the soaring price of crude, according to experts. Not only are revenues booming, but their sovereign-wealth funds have been pumping money into commodity index futures, helping to boost the price.

Crude rose to nearly $143 a barrel on Friday, before closing just above $140, after another wild week of fluctuations.

The price dropped below $132 in the middle of the week after the release of data showing rising American crude stocks and falling consumption, but then surged again on a prediction from the president of the Organisation of Petroleum Exporting Countries (Opec) that the price will rise to between $150 and $170 and a threat from Libya to cut production.

The US Congress, which is on the point of introducing measures to limit speculation in oil futures, heard from one hedge-fund manager last week, Michael Masters, that without it the oil price would drop to between $65 and $70 a barrel.

The Commodities Futures Trading Commission (CFTC), which oversees the US futures markets, insists speculation is not responsible for the rise in prices.

Last week, the acting chairman, Walter Lukken, conceded that the CFTC could not be sure of the amount of index trading in energy markets because of the methods used by traders.

Stephen Briese, editor of Commitmentsoftraders.org, and an expert in commodity-futures trading, said there was $230 billion (£115 billion) of investment in commodity-index futures, some of which came from sovereign wealth funds.

“The CFTC has abrogated its responsibility under the Commodity Exchange Act, which says it shall establish speculative-trading limits to prevent excess speculation,” he said. “Instead, it is systematically eliminating trading limits.”

Hank Paulson, the US Treasury secretary, will visit London this week for talks with Alistair Darling about the soaring oil price and the credit crunch.

Paulson, like Gordon Brown, says the answer to the high price lies with greater output from the oil producers. Despite the surging oil price, analysts do not think the Bank of England will be pushed into a rate hike.

The European Central Bank is set to raise its rate from 4% to 4.25% this week, but a survey of analysts by Ideaglobal.com suggests the next move in Britain is likely to be downwards.

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