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Nat Gas Rally About to Deflate: Pros

Lately all the Fast Money traders can talk about is nat gas and the sharp gains it’s made over the past month. Now what?

According to top energy pro Joe Terranova, the chief market strategist for Virtus, the trade is about to – well – run out of gas. “The big reason behind the rally was the hot weather gripping the nation,” he says. In other words, Terranova sees it as a play on increased demand for air conditioning.

But now we've turned the calendar and it's August.

“In only a few weeks the very hot weather will be nothing more than a memory."

Therefore, Terranova thinks if you’re long, it’s time to pare back positions.

OptionMonster Jon Najarian agrees. He also says at current levels the most likely move is lower. “I’m looking for the spot price to pull back below $3.”

Top trader Jeff Kilburg says the same. “I expect nat gas to settle back down to $2.50 or $2.60.” Kilburg also says if you agree with the thesis, play the UNG which tracks the spot price. "It should go lower," he explains.

Or, if you’re looking for a long trade, Guy Adami, who is managing director of stockMONSTER.com, says on a pullback, he’s a buyer of Apache. “It’s been trading between $80 and $100,” and he says there’s no reason for the stock to break trend.

* You can find our conversation about nat gas approximately 2 minutes into this video clip.

Posted by CNBC's Lee Brodie

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Trader disclosure: On August 1, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Weiss is long VZ; Steve Weiss is long T; Steve Weiss is long JPM; Steve Weiss is long WLP; Steve Weiss is long DGX; Steve Weiss is short JCP; Steve Weiss is short X; Joe Terranova is long SEPT. MINI S&P FUTURES; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long WFM; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

For Dennis Gartman
Dennis Gartman is long GOLD in YEN TERMS
Dennis Gartman is long Natural Gas

For Jeff Kilburg
Nothing to Disclose

CNBC.com with wires.

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