Ah haPrice of gas going way up. Heatwave...

Ah ha

Price of gas going way up. Heatwave USA

http://www.marketwatch.com/news/story/Story.aspx?guid=%7B1BF6F5E8%2DFDF1%2D4299%2DBDA9%2D087CD196F63D%7D&siteid=

Myra Saefong's Commodities Corner
Hot weather heats up commodity prospects
Natural gas gets a lift; heat sparks potential for cotton, grains, livestock
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Myra P. Saefong, MarketWatch
Last Update: 7:34 AM ET Jul 28, 2006


SAN FRANCISCO (MarketWatch) -- Sweltering weather across much of the nation this summer can translate into some profitable prospects in the commodities market.
Natural gas is one the most obvious of those opportunities, but grains, cotton and even livestock are other commodities whose supplies could suffer a hit from the heat, sending prices significantly higher.
"The heat wave that is baking much of the U.S. does present savvy market watchers with some potential profit opportunities -- due to the extreme heat's negative impact on crops and livestock, and increased energy consumption for air conditioning purposes," said Jim Wyckoff, a commodities analyst at TradingEducation.com.
Natural gas has an 85% correlation with temperatures, according to Ben Smith, a managing partner at First Enercast Financial.
"Especially in recent years with all the new natural-gas fueled electricity generation we've added, heat waves really strain this market," he said. "You get everyone going to the spot market to meet their fuel requirements to produce enough electricity to meet demand."
Natural gas provides about one-fifth of the power used to generate electricity in the nation, according to Sean Brodrick of MoneyandMarkets.com -- that means there's a one-in-five chance that Americans switching on their air conditioners are ultimately using natural gas.
So many people are "cranking up their air conditioners that whole power grids are sputtering and plunging people into sweltering blackness," he said, citing recent power outages in New York and tight power supplies in California.
'Natural gas is going to be one of the most exciting commodities to trade this summer .... It's the summer sleeper.'
— Sean Brodrick, MoneyandMarkets.com
In fact "the heat wave in California came at a great time for natural gas, as it allowed an over abundance of natural gas to be drawn down and prevent a collapse in prices well below $5" per million British thermal units, said Peter Grandich, editor of Grandich Publications.
Natural-gas futures prices fell to their lowest level in two years in early July, with the August contract tapping a low of $5.47 -- the contract's weakest level since July of 2004. See a related Commodities Corner column.
But the August contract peaked at a nearly six-week high of $7.25 Thursday, after several days of triple-digit temperatures across much of the U.S.
So far there's no end in sight, said Smith. "August futures and forecasts are already anticipating another hot month," he said.
Natural-gas prices look like they're "getting set to turn," said Darin Newsom, a senior analyst at DTN, a market news and information provider. Prices may even climb near $8.50 in the next 30-45 days, he said in an interview Wednesday.
Natural gas is "going to be one of the most exciting commodities to trade this summer," said Brodrick, referring to the commodity as the "summer sleeper" and likening investment in it to making lemons into refreshing summer lemonade.

Cheers

DYOR