OPEC's secretary-general called on Thursday for tighter regulation of oil markets to reduce the speculative investment the exporter group blames for driving prices to nearly $100 a barrel.

Oil markets have spun out of control, the group says, because of financial investors, combined with the impact of a weak U.S. dollar and rising political tensions.

Right now it is funds and speculators who invest in oil -- and financial markets interfere with the oil market, said Abdullah al-Badri, adding there was a need for more regulation.

Oil is driven by speculation and has become a financial investment -- that leads to exaggerated prices, he added.

Prices on Wednesday hit a record of $98.62 for U.S. crude and were trading just below $97 early on Thursday.

Some analysts and industry executives have also said speculators had fueled the latest price surge, saying a global credit squeeze and U.S. dollar weakness have lured some financial players away from equities and bonds.

Others say increasingly tight oil supplies are behind the rally.

Oil inventories in top consumer the United States have slipped to about 8 percent below last year's level.

Stockpiles in industrialized nations of the Organization for Economic Cooperation and Development could fall to 20 million barrels below the five-year average by the end of the year, according to the U.S. Energy Information Administration.

OPEC's secretary-general was speaking ahead of a summit of an OPEC heads of state in Riyadh next week.

The 12-member group is under pressure from consumer nations to increase supply to try to calm prices, but it is not expected to make a formal output decision until a conference of the Organization of the Petroleum Exporting Countries in December.

There is definitely no shortage of crude oil, the market is well supplied, Badri told an industry conference in Vienna, reiterating the view of the exporter group.

On December 5 we will discuss the market situation and OPEC is ready to interfere and help if it has to do with fundamentals. There is currently no interruption.

OPEC has already added 500,000 bpd from November 1 under an output agreement reached in September.

Badri, who is not the first to have called for greater transparency, did not give any details of how markets should be more tightly regulated.

The New York Mercantile Exchange (NYMEX), the world's biggest commodity market, is already regulated by the Commodity Futures Trading Commission (CFTC), but its main rival the IntercontinentalExchange (ICE) is subject to a lighter touch.

(Writing by Peg Mackey; Editing by Barbara Lewis)