As most Americans have already noticed, it's been a hot summer. In fact, the country is on pace for the hottest year in recorded history after the mild winter earlier, and the abnormal weather is having effects on markets far and wide. Recently, the drought in the Midwest has sent commodity prices for corn and other crops soaring, but perhaps the most surprising change has been the recovery in natural gas. Gas prices had been plummeting for the last few years because of the supply boom caused by hydraulic fracturing, but the high demand for air conditioning and the natural gas to power the country's cooling needs has eased worries of a supply glut. Natural gas is now at a 2012 high of $3.06/MMBtu, and United States Natural Gas
Let's take a look at some other gas stocks that are winning on the recent heat.
One of the biggest fears surrounding natural gas had been that storage capacity would run out before the winter extraction months hit, since last year's mild winter left abnormally high supplies of gas remaining in storage facilities. Whereas gas levels normally deplete to around 1,600 bcf by the end of the winter, this year only saw them decline to 2,400 bcf. Gas levels have reached close to 4,000 bcf in recent years, and total working capacity is just around 4,500 bcf.
Niska Gas Storage
PAA Natural Gas Storage
The cost to get natural gas out of the ground and to market varies widely depending on a number of factors. Like Niska, Ultra Petroleum
Similarly, Southwestern Energy
Despite the extreme volatility and uncertainty surrounding natural gas, our CAPS community is bullish on all four of these stocks, giving five stars (out of five) to all except Southwestern, which merits four stars. According to the members, the main argument for gas storage stocks seems to be that facilities will grow more necessary as natural gas usage becomes more prevalent and production increases. Unsurprisingly, they see the low-cost producers as the most likely to benefit from the modest recovery we've seen over the past month. No one knows for sure where natural gas is going, but these stocks look like some of the best plays in the sector. Look for earnings reports coming up to see how they dealt with rock-bottom prices in the second quarter.
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Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool owns shares of Ultra Petroleum. Motley Fool newsletter services have recommended buying shares of Ultra Petroleum. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.