With oil prices in a continued state of flux, energy investors are increasingly pivoting to natural gas stocks – a big mover as the second half of 2012 kicks into higher gear.

Natural gas advocates may feel they’re playing Avis to crude oil’s Hertz, but lately that gap has been shrinking as events in Iran and in the Eurozone have played havoc with oil prices while elevating natural gas stocks at the same time.

Take the NYSE Arca Natural Gas Index, which surged 3%, to $654, from Aug. 6 to Aug. 7.

That’s child’s play compared with XNG’s run-up during the past week. On Aug. 2, the index stood at $615. Five days later, the index had popped to $655.

Back on July 1, the index was hovering around $610, demonstrating that the long upward arch investors have seen in natural gas prices may well be sustainable.

Certainly, seasonal factors, like the end of a long, hot summer in most of the U.S., may ding oil and gas price levels, but most analysts expect natural gas prices to remain higher going into the autumn months. That’s especially true of U.S. natural gas exports, which seem remarkably bullish these days.

“A much larger potential impact on the balance of trade and jobs is the exporting of natural gas,” says Ben Dickey, a New York City-based registered investment advisor, in comments to Oil and Gas Investor.

Natural gas in the U.S. is trading around $2.90 per million Btu’s; however, that same gas is trading around $16.00 in Asia and $13.00 in Europe. There are also several current LNG projects under way for completion in 2015 and several major oil companies are considering even more projects.

As the natural gas market swells, what are the best natural gas plays for energy investors?

Dickey likes a slew of oil and gas companies, but one natural gas provider in particular.

“We continue to like Continental Resources (CLR), Anadarko Petroleum (APC) and EOG Resources (EOG) in energy,” he says. “We sold GeoResources (GEOI) since they received a buyout offer at a price that gave us a good profit for the short time we held it.”

But, he says, “the best gas play is Range Resources (RRC).

“They have very good acreage in the Marcellus, a lot of which is liquids-rich. In addition, their extraction cost is low enough for them to be profitable with low gas prices. They have grown their revenue per share at over 12% per year for the last decade. Gas prices will increase in the next few years, so this is a stock you can make money on now with a lot of up-side when gas prices rise.”

Others see movement in large gas shale areas, like the Bakken -- especially those companies with large stakes and booming production rates.

Tyler Kocon, a portfolio manager at Minneapolis-based Split Rock Trading, says that Kodiak Oil and Gas fills that need, but there may be a better option in Spectra Energy (trading at $30 per share as of Aug. 7, 2012).

Spectrum Energy stands as a fairly good contrast to KOG in relation to volatility,” says Kocon. In comments to OGI, here’s how he breaks down SE:

• “First of all, we like the yield (currently 3.8% as of Aug. 7, 2012) and the protection this dividend provides to the stock in general. We believe this dividend will aid in protecting the investor on the downside.

• SE is a fantastic play on the rising natural gas production rates coming from domestic producing companies. The country has more natural gas than it knows what to do with, and somebody has to provide storage for this resource. SE is a national leader in natural gas storage, gathering, processing and distribution. They service the entire natural gas downstream market, and that is important to us since we believe that natural gas prices will see a rebound during the mid-summer months.

• SE is also a great way to invest in companies that provide pipelines and other storage facilities without the hassle of a K1 tax form. Traditionally, companies that provide the same services and subsequently offer the same level of dividend yield are organized as an MLP. These MLPs are great for those reasons, but they force the investor to endure the hassle of a K1. We like pipelines, but avoiding those K1 documents is important to our clients. SE is a great way to accomplish both of those tasks.

• The incorporation of their pipeline business means that they can act as a toll road for natural gas production. They can collect fees on the transmission, processing, storage and distribution of the natural gas with very little exposure to the physical price of the commodity. No matter what the gas is selling for, a company will still have to pay SE to move and store it.”

By and large, natural gas stocks are offering some of the best returns up and down Wall Street.

According to the WallStreetNewsNetwork.com, more than 15 natural gas stocks offer yields of more than 3% right now, with TransCanada Corp. (trading at $46 per share) and Enterprise Products Partners (trading at $53 per share) leading the way, with yields of 4.8% and 3.9%, respectively.

Those numbers show that it’s a good time to be kicking some tires in the natural gas equities market. Increasingly, that’s exactly what energy investors seem to be doing.