Natural gas prices have recently become lighter than air, as the commodity finally gets some love after a year-long slide. Yet even though it has gained traction, our team of investment advisors is cautious about the fuel, unconvinced demand is set to take off.

After hitting a seven-year low of $2.41 per million British thermal units in early September, it's risen 54.4% to $3.72. Despite this recent rise, the commodity is still down 50.4% from a year ago.

The U.S. Energy Information Administration says improved retail sales and industrial production were likely factors in the upswing for natural gas.

Still, natural gas' long-term prospects look good. It is clean burning, large quantities of it are produced domestically and the government has interest in making it more popular. One measure of this is the New Alternative Transportation to Give Americans Solutions Act, introduced this past July, which would increase and extend tax credits for natural gas vehicles and refueling stations. Among other benefits, this bill would allow a 100% deduction for the cost of a natural gas vehicle manufacturing facility, provided said facility is in service before 2015. The bill was co-sponsored by Senators Orrin Hatch, R-Utah, Robert Menendez, D-N.J., and Lisa Murkowski, R-Alaska. Currently the bill sits before the Senate Finance Committee.

Gerard Klingman, the head of investment firm Klingman & Associates, feels that natural gas will likely rise through the fall, but even so he doesn't recommend investors try to capitalize on the recent action. Instead he thinks investors should get exposure to commodities through either a diversified fund or by working with a commodity-trading advisor. If you are interested in going the fund route, he suggests investigating either the Powershares Deutsche Bank Commodity Tracking Index (NYSE: DBC) or the Dow Jones AIG Commodity Exchange Traded Note (NYSE: DJP). "We believe that most investors are better served deciding how much of their portfolio should be allocated to commodities and then use the diversified exchange-traded fund option," he says. Year-to-date the Powershares ETF is up 3.4%, and the Dow Jones AIG ETF is up 7.8%.

Greg Ghodsi, the head of the 360 Wealth Management Group at Raymond James, takes an opposite approach. For those who want to invest in natural gas, he recommends individual stocks, as many in this sector pay dividends and have shown improvement in their charts. "The easy way to participate is through ETFs, but our indicators tell us that the trade is a high-risk bet," he says. "Supply at this time is much greater than demand."

Some names that Ghodsi says are worth investigating include Piedmont Natural Gas ( PNY - news - people ), Energen ( EGN - news - people ), ONEOK ( OKE - news - people ) and Gasprom OAO (ADR: OGZPY).

Of those listed above, the Russian firm Gazprom has had the best 2009, up 63.5%. For those interested in staying domestic, Energen has had the strongest performance, up 49.4% year-to-date, while paying a $0.50 dividend. ONEOK is second, up 23.8% in that time, paying a dividend of $1.68. Piedmont has lagged, down 22.7%, paying a $1.08 dividend. By contrast, the United States Natural Gas fund (NYSE: UNG) is down 51% year-to-date, giving some credence to Ghodsi's misgivings about playing the commodity alone.

Ginger Snyder, a senior vice president at Raymond James, is also less than enthused about natural gas. While recommending it for the firm's own portfolios, she has not recommended it for clients. "We continue to monitor the technical charts for indications of demand taking over, which would warrant an addition, but at this time we're not seeing anything that would suggest we add natural gas," she says.

Indeed, as of Sept. 11, the EIA estimated there were 3,458 billion cubic feet of working gas in underground storage, 16.4% above the five-year average. Overall, the EIA expects natural gas consumption to decline by 2.4% in 2009 and remain flat in 2010. Some of this flatness is explained by the addition of more energy coming from coal, the EIA says. Essentially, while natural gas has recently risen in price, it doesn't mean the sky is the limit.

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