By Leah McGrath Goodman

FORTUNE -- Traders, when not speaking on the record, will sometimes allude to the search for a financial Truth -- a belief that somewhere buried deep within the market there is a sweet spot that, if properly tapped, can unleash a fortune.

John Arnold, the 38-year-old billionaire gas trader who told his investors this week he planned to retire, was seen by many as the bearer of such a Truth. The celebrated necromancer of the energy market rose to fame in 2007, when he gate-crashed the Forbes 400 Richest Americans list as the youngest billionaire in the nation. And while it is likely that Arnold would scoff at the notion of a financial Truth, if there ever was one, it did appear to his trading brethren he was in possession of it....

Gas-fired power plants in April for the first time produced the same amount of generation as coal as decade-low gas prices prompted utilities to use the cheaper fuel to produce electricity, according to federal energy data Wednesday.

Since the U.S. Energy Information Administration (EIA) began compiling monthly statistics, natural gas and coal had the same share of total net power generation, 32 percent, during April, the agency said in a monthly update.

Historically, coal has been the fuel of choice for power generation because coal prices have been lower than natural gas prices for much of the last decade.

But sliding gas prices over the last year or so has made gas a more economic choice, allowing gas plants to increase their share of the nation's generation.

EIA said the output of coal-fired units declined in all regions, while the output from natural gas-fired combined-cycle plants increased across the board.

Coal consumption fell almost 23 percent to 51.5 million tons in April 2012 from the same month in the prior year.

Natural gas consumption meanwhile increased to 744 million cubic feet, up almost 36 percent from the same month in the prior year.

With the switch to gas, coal stocks topped 203 million tons in April 2012, up almost 17 percent from the same month last year. That is just below the all-time record of 204 million tons in November of 2009.

The biggest decline in coal-fired generation was in the Northeast where output dropped 88 percent in April, cutting coal's share of total generation in the region to less than 1 percent.

The Northeast consumed around 110,000 short tons of coal in April 2012 down from around 600,000 tons in April last year.

EIA said the biggest shifts from coal to gas were occurring in several regions, including the Southeast, Central, Mid-Atlantic and Northeast.

As for fuel prices, EIA said eastern coal from the Central Appalachian region in April remained more expensive than natural gas prices at both the Henry Hub and Transco Zone 6 in New York.

But western coal from the Powder River Basin was still cheaper than either eastern coal or gas, EIA said.

The Southeast, Florida, Mid-Atlantic and the Northeast regions use mostly bituminous coal, generally found in Appalachia. The West, Texas and Central regions use mostly subbituminous coal, primarily from the Powder River Basin in Wyoming and Montana.

Natural gas is up 5.54 percent at $3.18 per million British thermal units.

Natural gas prices are on a tear because of extreme heat conditions across the U.S.. Rising demand from power plants and a decline in drilling activity are pushing prices, but prices are still 35 percent below last year's highs, according to Bloomberg.

Natural gas futures plunged 8 percent Thursday as supplies grew more than expected last week and as hot temperatures were forecast to moderate by the middle of August.

This was the biggest one-day percentage decline for a front-month natural gas contract since September 17, 2009.

September natural gas futures closed down over 20 cents at $2.92 per million BTUS, settling below $3 for the first time in two weeks. Natural gas futures had topped $3.17 earlier in the session and hit a 7-month high of $3.21 on Tuesday.

Natural gas suffered steep losses after the U.S. Energy Information Administration reported storage levels rose by 28 billion cubic feet last week. Platts survey of analysts had predicted storage levels would rise by 20 to 24 billion cubic feet on average. The weekly supply increase was still less than the injection to storage at this time last year, and was also below the five-year average.

CitiFutures analyst Tim Evans says the report suggests that "more of the incremental power demand is being met by burning coal" and he sees "some bearish implications for the weeks ahead as well."

The $1.1 billion UNG ETF, which follows natural gas futures, was also hard hit in the session. After climbing steadily, gaining nearly 30 percent in the past two months alone, the UNG ETF also plunged nearly 8 percent Thursday.

http://www.cnbc.com/id/48469219

Nat Gas Rally About to Deflate: Pros

Lately all the Fast Money traders can talk about is nat gas and the sharp gains it’s made over the past month. Now what?

According to top energy pro Joe Terranova, the chief market strategist for Virtus, the trade is about to – well – run out of gas. “The big reason behind the rally was the hot weather gripping the nation,” he says. In other words, Terranova sees it as a play on increased demand for air conditioning.

But now we've turned the calendar and it's August.

“In only a few weeks the very hot weather will be nothing more than a memory."

Therefore, Terranova thinks if you’re long, it’s time to pare back positions.

OptionMonster Jon Najarian agrees. He also says at current levels the most likely move is lower. “I’m looking for the spot price to pull back below $3.”

Top trader Jeff Kilburg says the same. “I expect nat gas to settle back down to $2.50 or $2.60.” Kilburg also says if you agree with the thesis, play the UNG which tracks the spot price. "It should go lower," he explains.

http://www.cnbc.com/id/48451694

Soaring oil and gas production will propel North America into becoming a net energy exporter by 2025, Exxon Mobil said in its annual energy outlook.

More than half of the growth in unconventional natural gas supply over the next two decades will be in North America, supplies that will help reshape global markets, Exxon said.

Improvements in drilling technology such as hydraulic fracturing have unlocked vast shale oil and gas reserves, leading to a surge in production and reduction in the United States' dependence on foreign energy.

Exxon has invested heavily in U.S. natural gas assets in recent years, beginning with its 2010 purchase of shale gas operator XTO Energy. The Irving, Texas company is also investing in the search for crude oil produced from rock formations, but those supplies are so far relatively small.

"It's still very much early days for tight oil,'' William Colton,vice president for strategic planning at Exxon told reporters on a media call.

In September, Exxon said it would buy Denbury Resources's crude oil properties in the Bakken shale in North Dakota for $1.6 billion.

Growing supplies of North American natural gas are expected to spur trade with countries in Asia and Europe, said Exxon.

Companies including Exxon have already lined up to get permission to ship the country's cheap natural gas overseas. The only gas export terminal approved by the United States so far is Cheniere Energy's Sabine Pass facility in Louisiana.

Natural gas, which emits up to 60 percent less carbon dioxide than coal when used for electricity generation, is expected to overtake coal by 2025 as the second most-used fuel, according to the Exxon report.

Exxon expects natural gas, which has been one of its biggest investment areas in recent years, to account for 30 percent of global electricity generation by 2040 compared with less than 25 percent now.

Power plants in the United States are already using less coal as they switch to more efficient plants fired by natural gas.

Exxon said developing nations such as India and China will drive global energy demand, which is expected to increase 35 percent between 2010 and 2040.

Exxon's findings are similar to two recent reports from the Energy Information Administration (EIA) and the International Energy Agency (IEA).

The EIA said last Wednesday that U.S. natural gas production would grow faster than expected through the next two decades, paving the way for the country to be a net gas exporter as early as 2016.

The IEA said last month that the United States will overtake Saudi Arabia and Russia as the world's top oil producer by 2017 and North America will become a net oil exporter by 2030.