Natural Gas Rally Gets Derailed by Inventory Glut

Nat-gas futures jumped 6% Friday on hot weather bets, but the rally might be running on fumes. Here's the reality check: US inventories are sitting 6.6% above the 5-year average—basically oversupplied. The EIA report showed a +96 bcf build, beating expectations and crushing the bullish narrative.

What's actually happening:
- Production holding steady at 105.2 bcf/day
- LNG exports up 7.4% w/w to 14.8 bcf/day (good for gas demand)
- But electricity output DOWN 3.1% y/y—utilities aren't buying the AC surge story yet
- Gas drilling rigs at 109 (up from 94 last September, but still below June's 114 peak)

The real wildcard? Geopolitical easing. Israel-Iran ceasefire reduced supply anxiety—no Strait of Hormuz drama means LNG flows stay normal (that route handles 20% of global LNG). Europe's sitting at 57% storage vs. 66% seasonal average, so oversupply is a global story.

Bottom line: Weather bounces are real, but fundamental demand weakness + bloated inventories make this a trader's game, not a structural bull case.