“I think the (natural) gas storage surplus is smoke-and-mirrors,” said Phil Flynn, Energy Analyst for Alaron Trading Corporation in Chicago. “It masks an underlying problem with production.” Mr. Flynn is not alone in his assessment of the natural gas market. Jim Cramer of The Street.com echoed similar thoughts. Flynn wrote in his Energy Report on Tuesday, “Lets face it the heat has melted away the veil of secrecy around the natural gas complex.” The devastating U.S. heat wave has left its mark on North America’s electricity grids, which has now reversed the downward trending price of natural gas.

The year-to-date bottom for September natural gas futures prices came on July 18th. A reversal came the following day and pricing has since climbed higher on (a) California’s heat wave, (b) natural gas inventory drawdowns and (c) near-record high or record-high electricity usage in the eastern half of the United States and parts of Canada. Also on July 18th, we published our interview with Sprott Asset Management analyst Eric Nuttall, entitled, “Zero Doubt: Natural Gas Prices Will Go Higher Again.” The markets are all about timing and the interview with a member of the Sprott Asset Management team again reminds us why they are amongst the most prescient (and successful) of North America’s money managers.

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