No. 2 - Wet Hot American Summer

A government forecast released today called for an above-normal hurricane season. Meanwhile, temperatures this Summer are supposed to be even higher than last year. We may be in for one hot wet American Summer and that puts the natural gas market squarely in focus. What’s the natural gas trade heading into summer?

Eric Bolling calls natural gas the widow maker because it’s such a volatile commodity. He says it can’t go up until we know more about the Summer, therefore he’s squarely in the camp that believes we’re going to see higher natural gas prices.

Mark Papa, the Chief Executive of natural gas company EOG Resources (EOG) joins the guys for the rest of this conversation.

Are you anticipating significant price movement in natural gas?

“I would agree with Eric,” says Papa. “The other factors that come in (to play) are production declines in Canada ... and flat production in the United States. If we have a warmer than average summer and a more active hurricane season, all the elements are there – we may see gas prices approaching $10.”

Is natural gas more or less sensitive to the weather than crude oil?

“It’s more sensitive than crude oil on both the upside and downside.” replies Papa.

You’ve had a very prosperous few years – are you confident going forward?

"Regarding EOG and the likelihood of further advances in our equity value, I’m just as confident that the next 3 years are going to look very similar to the past 3 years as far as equity appreciation."

Why?

“The external macro environment looks bullish and internal growth prospects look strong."

How depended are you on commodity price for future performance?

“There’s a strong link between commodity price and equity values of all North American gas companies.. and we have strong internal growth.”

How likely is it that we will increase storage for natural gas?

“There’s a little bit of additional storage.. full storage last year was 3.5 trillion cubic feet, that’s going to grow to 3.6 or 3.7 this year.”

Dylan asks the guys of they’d rather be long a company like EOG or the commodity?

Eric Bolling says own the companies because the price of natural gas as a commodity is quite volatile.

Guy Adami, Pete Najarian and Jeff Macke all echo Eric’s advice. They, too, prefer the equity.

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Trader disclosure: On May 22, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (SWY); Najarian Owns (MDT), (STI); Bollings Owns Coffee, Sugar, Gold, Silver, March Natural Gas Futures, Is Short April Natural Gas Futures