Energy Funds Get a Lift From Higher Prices

Just two weeks ago, with West Texas intermediate crude oil trading at $73.36 per barrel, I called the bottom of the 2007 summer slide by predicting a move toward $80 oil. Wasting no time, crude oil closed at a record high of $80.09 on Thursday.

How did oil top $80?

The Energy Department cites lower inventories of both crude oil and gasoline. Hurricane Humberto popped up out of nowhere, knocking out power to Port Arthur, Texas, refineries owned by Total SA, Valero Energy(VLO Quote) and Royal Dutch Shell(RDS-B Quote) as well as to 114,000 Entergy(ETR Quote) customers. These factors, combined with a weakening dollar and pessimistic predictions of more Atlantic hurricanes, helped oil to the new record high.

While oil made its run to these heights, natural gas prices rebounded off the lower end of its $5.50-to-$9.00 per million British thermal unit trading range. The top-performing energy fund, the United States Natural Gas Fund (UNG Quote), rose by 8.66% for the week ended Sept. 13 as the Henry Hub natural gas futures contracts held by the fund moved up faster than the 3.65% advance in the spot price. ...