Top Natural Gas Plays for June

Natural gas futures hit their highest level in more than 15 weeks on Monday as speculation rose that the chances for a very active hurricane season are high. Plus, there is even more speculation that soon policy makers in Washington are going to start listening to natural gas bulls, such as T. Boone Pickens, who argue that natural gas is the best long-term solution -- economically and environmentally -- for solving America's energy problems.

Natural gas futures cooled off on Tuesday, dropping 2.2% following a cooler weather forecast for the U.S. Midwest and Northeast. An explosion in a natural gas pipeline in Texas also pressured prices lower. But if the trend really is strong, these two issues won't be able to keep prices down for long.

The U.S. Natural Gas Fund(UNG) recently broken above its 50-day moving average, and it has broken through some previous resistance at around $7.70 a share that held a strangle hold on this ETF for almost three months. The UNG is a pure play on the price of natural gas futures. This technical move is significant and could be marking a new trend higher that is still in the early stages of development.

Even President Obama recently pulled an about-face and endorsed natural gas as a viable alternative to crude oil during a speech last Wednesday at Carnegie Mellon in Pittsburgh,

So if the trend for natural gas is about to turn very bullish, how should you play it?

One natural gas stock that looks very promising is domestic natural gas producer Chesapeake Energy(CHK). One of the reasons to like Chesapeake is that in the past when natural gas prices have risen substantially, this stock has followed the trend. Back in 2007 when natural gas hit almost $14, Chesapeake traded over $60 a share. With the stock now trading at around $23 and natural gas futures prices around $5, you can see the upside could be huge if natural gas makes a big move.

In fact, one analyst at Morningstar believes that if natural gas rose up to $15, shares of Chesapeake would be worth a whopping $80. With the potential for a very active hurricane season, combined with the oil-blackened Gulf, which will heat up the waters and potentially produce stronger storms, you can see why $15 is a real possibility.

Who Owns Chesapeake? Carl Icahn T. Boone Pickens Ronald Muhlenkamp