By Brendan Conway

The craziness continues in natural gas, where the futures market has surged more than 7% Tuesday morning. Needless to say, this isnt for the buy-and-hold investor.

For the rest of you, its worth noting this isnt only about traders anticipation of another cold snap. Or another big drawdown in  Thursdays natural-gas inventory report.

Sure, those both matter. But supply bottlenecks meaning trouble moving gas where it is needed on the freezing East Coast, from the West and South where it is produced have also played a role in these nutty price swings.

Heres what Goldman Sachs commodity strategists Samantha Dart. Jeffrey Currie and Daniel Quigley said on the subject in a Monday note which raised the firms 2014 Nymex gas price forecast to $4.50 per million British thermal units from $4.25. The most actively traded futures contract has surged 35 cents to $5.26 this morning.

The recent $120/mmBtu spike in gas prices in New York underscores the ongoing bottleneck issues that plague some of the high gas consuming areas in the country. The system’s inability to deliver enough natural gas to where consumers are, especially given that the fastest-growing shale gas play in the US, the Marcellus, is nearby, raises the issues of what it takes to solve such bottlenecks and where and how such rapidly growing production can be allocated, as producers have faced some bottlenecks of their own. Specifically, Marcellus production growth reached almost 4 Bcf/d in 2013, with this increased supply having had a direct, negative impact on the regional basis (for producers), while consumer prices (city gates) have benefitted little, if at all, from the surging levels of production.

So should you expect natural gas to keep surging on account of these issues? No. As the Goldman trio explains further:

The fact that only bottlenecked regions such as the Northeast spiked beyond oil price levels continues to suggest the absence of more widespread deliverability issues in the country. Hence, with the worst of the winter arguably behind us (so, assuming no new ‘polar vortex’ ahead), we see no reason to expect significant spikes in front-month NYMEX natural gas in the coming weeks.

Now for some color on todays price move from Myra P. Saefong and Laura He of MarketWatch :

Jekyll and Hyde price action continues in natural gaswith a monstrous rally underway, said Matt Smith. author of energy and financial-market newsletter The Daily Distillation. The ebb and flow of weather outlooks means that natty is charging back above $5 as below-normal conditions blanket key regions such as the Midwest and Northeast through mid-Feb.

Add to this the prospect of a(nother) near-record withdrawal from storage on Thursday, and we are seeing the darker side of natural gas once more, he said in a daily email.

Checking in on the commoditys ETFs, United States Natural Gas Fund  (UNG ) is surging nearly 8%. The leveraged   VelocityShares 3X Long Natural Gas ETN  ( UGAZ ) is surging by nearly 20%, while its bearish counterpart,  VelocityShares 3X Inverse Natural Gas ETN  ( DGAZ ), is down by nearly the same percentage.

In other fast-trading natural-gas ETFs, ProShares Ultra DJ-UBS Natural Gas ETF  (BOIL ) is ahead by 13% while ProShares UltraShort DJ-UBS Natural Gas ETF  (KOLD ) is down by a similar margin.

Correction 2/5: The original version of this post misstated the price gain of the United States Natural Gas Fund as 20%. It was nearly 8%. The post also misstated the name of a VelocityShares ETN, since corrected.

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