I want to continue the discussion on our concerns for propane supply shortages and what the tea leaves are indicating right now.
As we discussed in yesterday’s Propane Buzzcast (linked here), there are significant areas of the country right now that are having a struggle to find spot propane loads and where they can find them, they are paying prices (relative to basis) unlike anything they have purchased before relative to this time of year.
RBN wrote an article today focused on NGL production and supply in the Northeast, more specifically out o the Marcellus-Utica shale play region.
Here is a snippet worth noting:

With all of that as background, we next look at Marcellus/Utica gas and NGL production, LPG exports from Marcus Hook and the potential for a propane supply squeeze this coming winter. According to the Energy Information Administration (EIA), gas production in the Appalachian region — almost all of it from the Marcellus/Utica — peaked in November 2019 at 33.8 Bcf/d and has been falling slowly ever since. (It now stands at about 32.6 Bcf/d.)

In recent days, a number of producers have indicated that they plan to further trim their gas production — and, with it, their NGL production — at least until natural gas prices show more strength

For example, Equitrans Midstream Corp. said in a regulatory filing on Monday (May 18) that its largest customer, EQT Corp., this past weekend
started reducing its gas production in the Marcellus/Utica by up to 1.4 Bcf/d
EQT is the largest producer in the region, and many of its wells produce significant volumes of NGLs. Other Marcellus/Utica producers also have indicated in recent weeks that they will be reining in their production this spring
The rig count in the region, which stood at 51 at the start of 2020, was down to 38 as of May 15, according to Baker Hughes –– more evidence that production of both natural gas and NGLs in the region is waning
Our take is this; do not get lulled into a false sense of security that you can just bank on doing business how and where you have always done it for this coming winter. We have a long way to go until winter, and this industry has had ‘just in time’ supply for several years now. But the greater energy market complex as a whole has never faced the type of challenges it is facing right now.
Another aspect we discussed this this weeks Propane Buzzcast was the significant overhang in gasoline and distillate inventories, and how we are unlikely to see refining activity pick back up (which could lead to more propane production from crude oil) until those supply overhangs were cleaned up. You will see the days of supply on hand in distillates (left) and gasoline (right) in the following graphs, relative to last year at the same time: