COMMODITIES: Crude Rallies On Further Russian Sanctions, Henry Hub Surges

• Crude markets are on track for their highest close since Nov 22. Support comes from the possibility of tighter sanctions on Russian crude, with Bloomberg also noting that algorithmic buying activity has supported gains.
• WTI Jan 25 is up by 2.6% at $70.4/bbl.
• For WTI futures, initial firm resistance to watch is unchanged at $72.41, the Nov 7 high. Above here, key short-term resistance is at $77.04, the Oct 8 high.
• Meanwhile, Henry Hub front month is headed for its highest close since Nov 25, supported by the current above normal demand and despite milder weather forecasts for next week.
• US Natgas Jan 25 is up 7.5% at $3.4/mmbtu.
• Elsewhere, spot gold has risen for a fourth session in a row, with the yellow metal gaining by 0.8% to $2,716/oz, as US CPI inflation data reaffirmed expectations of a Fed rate cut next week.
• Gold briefly tested resistance at $2,721.4, the Nov 25 high, before paring gains.
• Clearance of this resistance level would highlight a bullish short-term development, opening $2,730.4, the 76.4% retracement of the Oct 31 - Nov 14 bear leg.

• RES 4: 155.89/156.75 High Nov 20 / 15 and the bull trigger
• RES 3: 154.84 76.4% retracement of the Nov 15 - Dec 3 pullback
• RES 2: 153.66 61.8% retracement of the Nov 15 - Dec 3 pullback   
• RES 1: 152.83 High Dec 11
• PRICE: 152.44 @ 15:56 GMT Dec 11 
• SUP 1: 149.37/148.65 Low Dec 06 / 03 and the bear trigger 
• SUP 2: 148.17 50.0% retracement of the Sep 16 - Nov 15 bull leg 
• SUP 3: 147.67 2.0% 10-dma envelope 
• SUP 4: 147.35 Low Oct 8

USDJPY traded higher again Wednesday, as the pair extends the recovery from 148.65, the Dec 3 low. The pair has traded through both the 20- and 50-day EMAs. This undermines the recent bearish theme and for now, signals scope for an extension higher. The next firm short-term resistance is at 153.66, a Fibonacci retracement. A reversal lower would signal the end of the latest bounce and refocus attention on the bear trigger at 148.65, the Dec 3 low.     

November's budget balance was in deficit by $356.5B, about $10B more than expected and a jump from $314B in October.

• This brings the 12-month rolling deficit to $2.08T, the highest since Jul 2023. That is closer to 7% than 6% of 2025 (calendar year) projected GDP.
• Treasury doesn't provide analysis of the figures in the report. But through the first two months of the fiscal year, the total deficit is tracking $624B, one-third of the $1.88T full-year estimate (based on the OMB's July estimates- though of course while most months will register deficits, tax dates including April's will help offset the widening trend).
• The incoming Trump administration hopes to make room for tax cuts in part through paring inefficiencies/spending, but as the graphic provided by the Treasury underlines, most spending is on non-discretionary items  (of $1.25T of total outlays so far in FY2025, $900B was spent on Social Security, Medicare, National Defense, and Net Interest).
• Once again, net interest payments were a key factor, totaling $79.4B - similar to the past several months but with rates rising (and considering the ballooning size of the debt pile), the 12-month rolling total has hit fresh all-time high of $893B.