(Corrects paragraph 8 to clarify role of OPEC)
By Huw Jones and Pratima Desai
LONDON, July 7 (Reuters) - The Group of Eight meeting this week won't agree on detailed plans to make world oil prices less volatile but the issue is unlikely to fade away quickly despite widespread scepticism, diplomats and dealers say.
France and Britain said this week they would publish a joint position on the issue of oil price fluctuations as leaders of the G8 gather in the Italian town of L'Aquila.
"We must, with the fossil fuel producing countries, try and stabilise the oil price in a reasonable range, neither too high nor too low," French President Nicolas Sarkozy said.
"The world will not recover from these yo-yo effects that take us from one excess to another. There too, states must try to take a leading role and reintroduce some transparency and regulation," he said.
However, a senior German official who requested anonymity told reporters in Berlin on Tuesday the leaders would not set a corridor for the oil price in documents agreed at the summit.
Two European G8 sources said such plans would be a non-runner this week and top industry figures were also sceptical.
Christophe de Margerie, chief executive of French oil firm Total, told the International Oil Daily in May the market was very broad, making it hard to determine prices.
Oil is already one of the few global markets where a cartel to influence prices by production agreements exists -- the Organization of the Petroleum Exporting Countries (OPEC).
But it has failed to stop prices slumping in the teeth of economic recession despite controlling 40 percent of output.
The price of crude oil soared to almost $150 per barrel last July, only to fall to under $40 some months later. It was trading at around $64.80 on Tuesday.
A French source has told Reuters there was a need to fix a sustainable price that was not too low to hinder investment in green technology or too high to stymie growth.
Eugen Weinberg, commodities analyst at Commerzbank, said it was unclear whose price would be deemed fair -- a big consumer like the United States or major producer like Saudi Arabia.
"In the 1980s before oil futures were introduced, the market was very similar to the iron ore market now. Consumers and producers agreed between themselves -- but there isn't a lot of flexibility this way," Weinberg said.
"I do believe the market needs more regulation because market volatility means consumers and producers cannot form long term views," Weinberg added.
Other traders said regulation was inevitable to some extent.
"It might not happen this week at the G8, but it will happen. They will talk about it, but they won't be able to agree anything because they don't really understand how these markets work," the dealer said.
"The lead will have to be taken by regulators and exchanges," the dealer added.
The Washington Post reported on Tuesday the U.S. Commodity Futures Trading Commission will propose tougher position limits to try and curb speculation in commodities markets.
Further intervention could also be in the pipeline.
French Economy Minister Christine Lagarde has said the International Monetary Fund, the International Organisation of Securities Commissions and the International Energy Agency have been asked to propose methods to monitor oil markets better.
Much could hinge on getting all major stakeholders on board.
"We will have to have discussions with the Saudis and with OPEC. We will have to have discussions with our other partners within the G8 and the G20 ... to understand what the demand will be in the future, what the supply will be," British Prime Minister Gordon Brown said this week.
(Reporting by Huw Jones and Pratima Desai; Editing by Ruth Pitchford)