Though the winter in the U.S. was the warmest on record,
lowering demand, gas prices have climbed 54 percent this year as
supplies have dropped. Several gas-fired power plants are expected
to begin operating in the next few months, straining inventories
and brightening the prospects of producers.
``The strategy here for investors is to look at the names
that haven't risen enough to reflect higher natural-gas prices,''
said Kenneth Hoffman, manager of the Orbitex Strategic Natural
Resources Fund, which owns shares of Apache, Cross Timbers Oil Co.
and other exploration companies.
Gas supplies in the U.S. are 25 percent below last year's
levels, the American Gas Association estimates. The price of gas
rose to $3.352 a thousand cubic feet today on the New York
Mercantile Exchange, the highest closing price for June delivery
since the contract began trading in 1990. It was the highest
closing price for delivery in any month since November 1997.
Prices could rise further, say analysts at ABN Amro Inc. and
PaineWebber Inc., as the industry builds up supplies before winter
and hot weather requires utilities to burn more to provide power
needed to run air conditioners.
Natural gas prices likely will hover between $2.25 and $3.25
for most of the year -- 50 percent above the range of the past 15
years, Hoffman said. They may top $4 at times, he said.
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