Natural gas hits year high as glut fears ease

NEW YORK -- Natural gas futures jumped 13 cents Monday, nearly 4 percent, to $3.45 per thousand cubic feet.

Futures hit $3.48 per 1,000 cubic feet in the morning, the highest level for the year. Natural gas is up 24 percent over the past month and up 81 percent since hitting a 10-year low of $1.91 on April 19.

In the spring, traders were worried that a glut of gas that had built up during a warm winter would continue to grow throughout the summer and fill the nation's storage facilities completely.

A scorching summer relieved that pressure because utilities burned more gas than expected to meet demand for electricity to power air conditioning.

"Now that storage is no longer the major issue, it's about how the weather is going to shape up for this coming winter," said Anthony Yuen, an analyst at Citibank.

Forecasters don't expect a colder-than-normal winter, though, so that could keep a lid on prices. Natural gas is still below the year-ago level of $3.67. And Addison Armstrong of Tradition Energy says the price jump could quickly turn into a price slide.

"Once this flurry of buying comes to an end, we're going to look at a market that has run out of reasons to buy and then there is a strong potential for retrenchment," he said.