Hedge funds have the money and leverage to place large bets in commodities. This year, in particular, hedge funds have stepped up their exposure to commodities. Gold is a good example. Hedge funds have moved aggressively on the buy side during this past year.

More than ever, the movement of funds by hedge funds is controlling commodity prices. Hedge funds dumped 25% of their positions in natural gas in the week ending Sept. 28, as reported in BusinessWeek.

The commodity exchanges publish a commitment of traders report, which tracks the number of long and short contracts. Net long positions fell by 17,373 to 51,306.

No natural gas price recovery before 2012? That's what one firm is predicting.

Canada-based FirstEnergy Capital Corp. lowered its 2010 average natural gas price forecast to $4.63 per million BTUs (MMBtu), down from $5 per MMBtu, calgaryherald.com reported Monday.

FirstEnergy also lowered its average 2011 price to $4.75 per MMBtu. Among the factors likely to keep natural gas prices low: increased shale gas production in the United States.

I wrote about considering taking some profits off the table with Cameron International (CAM) here on April 24, 2009, when the stock was at a price of $25.59. It proved to be a prudent warning, as CAM soon dropped from highs near $48 to about $31 in June, largely due to jitters about the deepwater offshore oil drilling sector.

However, Cameron has since popped back above the key, 50-day moving average, and I obviously still like the shares here.

Cameron should benefit from the Obama administration's likely, revised blowout preventer safety rules, as oil companies conform to the new standards.

"The biggest opportunity for energy investors today is natural gas. And investors can buy 30 natural gas stocks with one ETF: the First Trust ISE-Reserve Natural Gas ETF (FCG)," says Ian Wyatt.

The editor of The 100K Portfolio explains, "There are many reasons for businesses, consumers, investors and politicians to be bullish on this commodity. Natural gas seemingly has everything we could want from an energy source - it's cheap, clean, and there is an abundance of it throughout our country.

"For this very reason, ExxonMobil, the world's largest energy company, is acquiring one of the leading natural gas companies in the country - XTO Energy.

The $41 billion acquisition will make ExxonMobil the single biggest producer of natural gas, solidifying the company's commanding position in the energy sector. Smart investors should follow Exxon's lead and look to gain exposure to natural gas today.

The shares of TransCanada Corp. (TRP), which I first discussed on May 11, 2009 at a price of $26.56, have cycled between $31 and $38 over the last four months or so, but I still like the business model. Here's why:

TransCanada Corp. is natural gas play with promise: It's a natural gas transmission and storage company that also owns oil assets and electric power generation assets (including 19 wholly owned power plants). A solid $1.45 annual dividend adds to the positive story.

A new study conducted by the Massachusetts Institute of Technology states that natural gas usage will double in the next several decades, from the present 20% to 40%.

Why natural gas? First off, we have plenty of it. Globally, we have a century and half of recoverable natural gas. In the Unites States, the amount of recoverable gas is equal to 92 times consumption.

The shares of Fluor Corporation (FLR), a leading international design, engineering, and contracting firm that was first discussed here on February 17, 2009, at a price of $39.21, have pulled-back, due to the Dow's recent retreat and U.S. work stoppages in the oil/natural gas sector.

Further, FLR's price has drifted dangerously close to the sell/stop loss at $39. Still, the calculation here is that the shares will hold support at $40, then start heading north again as oil/natural gas projects slowly resume in the quarters ahead.

BP Plc.'s (BP) Deepwater Horizen oil spill in the Gulf of Mexico -- the nation's worst spill in the modern era -- may increase interest in alternative transport fuels for cars and trucks. And a leading contender is: natural gas.

Domestic, cleaner, abundant, and (so far) cheaper than oil, natural gas has the potential to displace a significant amount of oil as a transport fuel.

Westport Innovations (WPRT) is one publicly-traded company that sees a bright future for natural gas in the commercial truck sector, among other transport, industrial, and power generation applications.

Is a recent legislative development in Colorado indicative of an energy trend? Certain energy investors and environmentalists hope so. Colorado Gov. Bill Ritter Monday signed into law a measure that will upgrade a coal-fired plant, Front Range, to enable it to run on natural gas. The Denverpost.com reported on the coal to natural gas conversion Tuesday.

A diverse coalition of gas companies, environmentalists, Democrats, and Republicans, found enough common ground to marshal the bill -- which was strongly opposed by the Colorado Mining Association -- through the legislature.

Apache Corporation (APA) announced last week that it plans to acquire Mariner Energy Inc. (ME) in a $4 billion transaction. Typically when we see one company announce that it is going to acquire another company, the stock price of the company doing the acquiring goes down in the short term. But in the long term, this acquisition may help Apache's stock price break out.

Apache has been stuck in a consolidation range for a few months now. The stock price keeps bouncing back and forth between a slightly down-trending resistance level and an up-trending support level.

In investing, there's an adage that posits: The best investments are often the ones you don't make.

And isn't that the truth regarding natural gas, or at least the natural gas-based fund, United States Natural Gas Fund LP (UNG)?

In politics, it's called "smurfing" (sometimes it's also referred to as triangulation) -- where one takes an issue on which the opposition party has an advantage, modifies it, and transforms it into one that benefits your party.

President Bill Clinton used it successfully during the nation's mood for welfare reform in the 1990s: he took an issue that likely would have benefited Republicans and transformed it into one that became one of his presidency's hallmarks.

And now President Barack Obama is attempting to do it with his decision to open portions of the U.S. coastline to offshore drilling for oil and natural gas.

Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip "under the radar."

Case in point: Royal Dutch Shell Plc (RDS.A), Europe's second largest oil company, expects natural gas production to become its dominant energy form, rising to 52% of output in 2012, Bloomberg News reported.

Shell is teaming up with China-based energy firms as it broadens its natural gas holdings. Shells shares rose 25 cents to $58.51 in Tuesday afternoon trading.

Now here's a strange phenomenon. The price of crude oil is near $83.00 per barrel and gas in nearing $3.00 per gallon.

Yet natural gas is going in the opposite direction. First we must mention that crude oil is an international commodity, while natural gas is a domestic product. The dynamics for each commodity are different. For crude oil, the United States is bidding against developing countries like China and India. These developing countries' economies are growing and need more oil. Hence the price is going up.

Something's got to give regarding oil and natural gas prices: the gap between the two is too large -- oil is currently 15.7 times the price of natural gas, when the historical average is about 8.4 over the past decade.

Oil traded Friday afternoon up 62 cents to $79.68 per barrel, while natural gas is down 11 cents to $5.06 per million BTUs (MMBtu).