COVID-19 continues to have various impacts on power and natural gas markets across the U.S. Trading trends in prices for balance of 2020 delivery beginning July 1 illustrate the regional differences driven by differing government orders, economic impacts, and other factors. New York has so far been one of the hardest hit areas, and NYISO has reported overall electricity load declines of close to 10% due to COVID-19. The PJM area has also been hard hit, particularly in New Jersey, and other areas along the east coast. PJM has seen average load decreases of 6-8% due to COVID-19. Prices for electricity in PJM and NYISO have recovered from their lows in March-April as those states are seeing declining cases and are opening their economies once again.
Texas and California, in contrast, have seen prices move up more sharply since bottoming in March, though recent price trends have once again turned lower. ERCOT has reported approximately 2% lower electrical demand in Texas due to COVID-19, while CAISO has also seen smaller losses than northeast states.
The natural gas picture is more complicated with a variety of COVID-19 related impacts affecting prices. The pandemic came about during the tail of a warm winter when demand for gas for heating needs is normally declining. While demand loss was seen to an extent, issues on the supply side had more of an impact on prices. With crude oil briefly trading at negative price levels in April, and overall clearing much lower early in the pandemic, crude oil production has been declining. This impacts natural gas supply in that a decline in crude production will also bring a decline in associated gas production. Gas prices nationwide moved up on concerns of tightening supply in late April, but have since moderated as crude prices have increased to near $40/barrel. Additionally, due to decreasing demand for natural gas globally from COVID-19 (and a warm northern hemisphere winter), LNG exports from the U.S. have slowed considerably and may continue at lower levels for several months. This has also helped to moderate natural gas prices since the beginning of May. Overall gas basis hasn’t moved significantly, with the exception of the rocky mountain region, which has seen relative strength.