Smoke from east Canada wildfires has descended upon eastern US population centers, lowering temperatures and spurring air quality alerts, which could affect natural gas and power demand.
Unlike the western Canada wildfires last month that led oil and gas producers to shut in production, the eastern wildfires are likely to mostly affect the demand side of the gas and power markets.
Heavy smoke today covered the skies of US states along the Atlantic seaboard from Rhode Island to South Carolina, as well as pockets of Appalachia, the US Midwest and the southeast Canadian cities of Toronto and Ottawa. The smoke is expected to remain in the eastern US through the end of the week, though there is uncertainty regarding winds, rain and the trajectory of the smoke and fire itself.
As the US gas market enters the summer cooling season, smoke-filled skies could lower temperatures by blocking sunlight. Lower summer temperatures lead to reduced power demand.
"Smoke from Canadian wildfires could have cooler implications for the eastern Great Lakes and along the east coast," private forecaster Maxar said.
About 46pc of New York's electricity was generated by gas in 2021, according to the US Energy Information Administration.
Moreover, air quality alerts are likely to keep many residents indoors. This could lead to reduced business hours and closed offices, factories and schools. Commercial and industrial gas and power demand could fall as a result.
The New York State Department of Environmental Conservation yesterday issued an air quality health advisory for all five boroughs of New York City. New York City mayor Eric Adams last night ordered New York City public schools not to offer any outdoor activities today.
Overcast skies also reduce solar generation, which displaces generation fuels like coal and gas when the sun is shining.
As the western Canada fires subsided last week, US gas imports from Canada on 1 June rose to a 2023 high of 6.2 Bcf/d (176mn m3/d), according to analysts with Gelber & Associates.
US gas prices have been depressed for months following a historically mild winter with reduced LNG export capacity, which created an oversupplied market.
The New York Zone J peak day-ahead price, an indicator of New York City daytime electricity prices, yesterday fell to $26.03/MWh, down by 3pc from the previous session. The Transco zone 6 in New York index, an indicator of New York gas prices, yesterday fell by 3pc to $1.43/mmBtu.
