) -- Natural gas futures on the Nymex surged Monday as

Exxon Mobil

(XOM) - Get Report

made a big bet on the commodity when it announced its

decision to pick up unconventional natural gas producer

XTO Energy


in a $41 billion all-stock deal.

Prices on the January natural gas contract soared as high as $5.41 per million British thermal units during Monday's trading session before settling up by 17 cents, or 3.3%, at $5.33. Forecasts for cold weather also lifted natural gas prices on Monday.

The market viewed Exxon's deal, which values XTO at a 25% premium, as a significant bet on the future potential of natural gas and lifted shares across the natural gas sector as speculation regarding future deals rose.

The Arca Natural Gas Index increased 4.5%.


(APA) - Get Report

closed Monday's session up by $3.87, or 5.8%, at $24.37;

Anadarko Petroleum

(APC) - Get Report

rose $2.57, or 4.4%, to $60.56;

Chesapeake Energy

(CHK) - Get Report

gained $1.34, or 5.8%, at $24.37; and

TheStreet Recommends

Devon Energy

(DVN) - Get Report

closed ahead by $2.91, or 4.6%, at $66.80.


U.S. Natural Gas Fund

(UNG) - Get Report

rose 2.8% to finish at $9.84.

"Exxon Mobil has stated that it believes demand for natural gas over the next 20 years will grow at twice the pace of liquids demand (1.8% vs. 0.9%)," said Citi analyst Faisel Khan. "While we believe Exxon could hire expertise in unconventional gas rather than buy an entire company, Exxon does not have a strong footprint in unconventional gas, and XTO certainly represents a full entry into the play both domestically and globally."

Crude oil prices, meanwhile, continued their losing streak, closing lower for the ninth straight session. The January crude contract settled Monday down by 36 cents, or 0.5%, at $69.87 a barrel.

Even a weak U.S. dollar did little to boost the investment appeal of the dollar-priced commodity as the market awaited signs of a sustainable turnaround in demand. The dollar index was last down by 0.3%.

The American Petroleum reports weekly inventory levels late Tuesday, followed by the U.S. Energy Department's weekly supply report on Wednesday morning. Analysts polled by Platts are expecting a 2 million-barrel draw to crude inventories in the week ending Dec. 11. Distillate levels, which have triggered demand concerns with continued builds, also are expected to fall in response to colder temperatures.

Shares of Exxon Mobil and


(CVX) - Get Report

ended the day lower by 4.3% and 0.6%, respectively.

Both the NYSE Arca Oil Index and the

United States Oil Fund

(USO) - Get Report

, however, finished Monday's session slightly ahead as the blockbuster deal boosted energy shares.

Elsewhere on the Nymex, the January contract for reformulated gasoline shed close to a penny, or 0.8%, to settle at $1.83 a gallon. January heating oil was slightly lower, by 0.02%, at $1.91 a gallon.

--Written by Melinda Peer in New York