'require' keyword not being recognized by webstorm

I'm using WebStorm as the IDE.

Here's my folder structure and express.js insalled:

But my sample code is not aware of the require keyword:

var express = require('express');
var app = express();

app.listen(1337, function(){
    console.log("ready");
});

Update

Per Darin's answer Here's my package.json file which now sits in the root of the Website folder:

{
  "name": "MyTestSite.com",
  "version": "0.0.1",
  "description": "A Website",
  "main": "test.js",
  "directories": {
    "test": "tests"
  },
  "dependencies": {
    "express": "^4.11.2"
  },
  "devDependencies": {},
  "scripts": {
    "test": "n/a"
  },
  "repository": {
    "type": "git",
    "url": "https://github.com/n/a"
  },
  "keywords": [
    "express"
  ],
  "author": "My Name",
  "license": "n/a",
  "bugs": {
    "url": "http://ift.tt/17FeEEr"
  },
  "homepage": "https://github.com/n/a"
}

This was created with npm init. I don't think I need all that crap in there so now I just have:

{
  "name": "MyTestSite.com",
  "version": "0.0.1",
  "description": "A Website",
  "main": "test.js",
  "directories": {
    "test": "tests"
  },
  "dependencies": {
    "express": "^4.11.2"
  }
}

I must have something malformed here...WebStorm still doesn't recognize the require keyword.

require is a keyword for npm isn't it?