Citi: Russia may be testing US gas nerve with Europe push

Bloomberg

Russia’s strong natural gas shipments to Europe may be an attempt to test the resilience of US exporters, according to Citigroup Inc.
Shipments this year from Russia have helped boost European gas storage to near full capacity and exace- rbated the regio-
n’s oversupply, the bank’s analysts including Ed Morse wrote in a June 9 report. One motivation for not cutting that supply — which would help prices recover — could be that Moscow is “testing the response of the global gas market in a low price environment, especially US LNG export elasticity.”
Given the current storage levels in Europe, restricting US LNG exports for two months may make sense, according to Citigroup.
That could trim about 400 billion cubic
feet of supply in late summer and early fall, roughly equivalent to the inventory overhang in Europe. Otherwise, Russian pipeline exports to Europe may have to fall by as much as
15 percent year-on-year to balance the market, it estimates.