So far this year, Russia has been flooding the European markets with an oversupply of natural gas despite the fact that the glut is pushing natural gas prices lower. Booming exports from Russia, which had already been the largest supplier of natural gas to the continent, have nearly maxed out European natural gas storage capacity and added to what was already an oversupply of natural gas in the region. This will likely push Europe to cut down on their imports of natural gas from the United States in the short term. According to some experts, this is potentially all part of a Russian plan to put the United States to the test.
This could be all part of a plan, however, to “test the resilience of U.S. exporters”, according to multinational investment banking corporation Citigroup Inc. as reported by Bloomberg. In a report released earlier this month, Ed Morse and other bank analysts from Citigroup opined that Russia has kept pumping gas into Europe in lieu of letting gas prices return to a higher price point because Putin’s administration is “testing the response of the global gas market in a low price environment, especially U.S. LNG export elasticity.”
If Citigroup is correct, and Russia is putting the United States gas sector through a kind of stress test, this would mean that we can expect global natural gas prices to remain at an uncharacteristically low level through autumn and even through the end of the year. “Given the oversupply, Citigroup cut its gas price forecasts for this year by as much as 18 percent” says the Bloomberg report. “U.S. Henry Hub is seen at $2.50 per million British thermal units, European Title Transfer Facility at $5 and Asia’s Japan/Korea Marker benchmark at $5.80.”