Gold Mining Stocks: Major Uptrend in Progress

Although they’re more volatile than Gold, if you can position yourself on the ‘right’ side of their dominant trend, investments in fundamentally sound Gold mining shares can be even more profitable than investing in physical Gold. Here’s a look at the major trend move underway in the Gold Bugs index, one of the most widely regarded indexes that scores of precious metals equity traders and investors rely on.

My, how times do change. Less than a year ago, the share prices of virtually every senior and junior Gold mining company were on the proverbial ‘ash heap,’ and some market analysts had doubts that the bull run in the precious metals sector would ever regain a solid footing, much less soar to new highs. And yet, that’s just what happened - a complete recovery across the entire sector (including Silver and Silver mining companies, too), with Gold now at all-time highs and Silver up more than 100% in less than 12 months. Even better for those who trade Gold mining stocks, the Gold Bugs index (which tracks the performance of some of the biggest and most fundamentally sound Gold miners) is up a mind-jarring 200% since October 2008 – and the uptrend doesn’t appear to be waning yet. Let’s have a closer look at the weekly technical chart of the Gold Bugs index and examine the key trend indicators as see what they may be telling us about the future trajectory of prices for this volatile and potentially profitable sector of the market.

Dollar still looks weak in the short-term

With unemployment still at historic highs and the state of the economy still fragile, most top economists expect Federal Reserve Chairman Ben Bernanke to announce Wednesday (November 4) afternoon that the Central Bank is keep its key interest rate at its current low point.

Central Bank members conclude their two-day policy meeting later Wednesday. Along with the announcement on interest rate policy, analysts and investors are going to watch for commentary about the board’s perception of the overall economy as well as various key sectors.

The Fed has maintained a low to no lending rate policy for banks for several months as part of an effort to reduce lending costs and to encourage home, auto and other purchasing. This policy has helped mortgage-strapped homeowners to refinance in some cases and it has helped struggling debtors with lower credit card and loan financing costs.

One effect of a lower interest rate policy is that it has helped hold down an already beat up dollar. The dollar has been in a relatively weak position on the global front for sometime, and with little interest yield, no change appears on the horizon.

The perception of dollar weakness has not been as much because speculators believe the US economy is in that much worse condition than global counterparts. It has been created more as a result of investors fleeing dollar positions for safe investments like gold, which is currently closing in on $1,100 per ounce.

As the economy has improved, another reality has been speculators jumping into oil positions. The correlation between improving oil prices (currently over $80 per barrel) and positive sentiment on the economy has been real and obvious.

Despite holding firm in recent weeks, the dollar is still under short-to-medium term pressure against the Euro, Pound, and other major currencies. One Euro is worth just shy of $1.48, and looks poised for a surge past $1.50. One British Pound fetches $1.6531 and a retest of the medium-term high over $1.70 also seems likely.

The dollar has been especially weak against the Japanese yen of late. Global perception seems to indicate that many expect the world’s second largest economy to rebound and thrive more quickly than the largest. One dollar is currently worth only 90.83 yen.

Most analysts seem to agree that a low interest rate policy is still important until the labor sector improves. American consumers and businesses need all the help they can get. However, the dollar is likely to pay the price until it is freed from the binds of no yield.

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significan.

Euro May Have Established Corrective High

The EURUSD and USDCHF have held their 61.8% retracements of impulses towards US dollar strength. The NZDUSD pattern from its high is also bearish. Patterns suggest that dollar strength will be the next significant move.arallel channel support and the 50 day SMA have held in the EURUSD, which keeps the larger uptrend intact at least for the time being. Still, momentum diverged during the rallies from 1.3747 and 1.4480, which is one reason I feel that the 5th wave labeling (2 different degrees) is correct. With bigger picture bearish implications, I must respect this bearish count. 1.4900/20 is serving as resistance. Coming under 1.4800 would bolster confidence.

GLOBAL MARKETS-Stocks jump, gold off highs on U.S. jobs data

The number of U.S. workers filing new claims for jobless benefits fell more than expected last week to a 10-month low, while worker productivity surged at a 9.5 percent annual rate, improving the outlook for both the economy and inflation.

The more stable dollar put a damper on commodity prices in general. U.S. crude oil prices dropped as much as $1 per barrel, snapping a three-day rally, as investors adopted a cautious tone before Friday's key U.S. employment report.

Short-dated U.S. Treasury prices rose on the benign inflation outlook, which resonated with the U.S. Federal Reserve's pledge a day earlier to keep interest rates low for "an extended period."

Long-dated Treasury prices fell, however, on concerns about upcoming supply of bonds and as the positive news on the economy curbed the safe-haven bid for government debt.

Wall Street stock indexes closed about 2 percent higher, with the Dow closing about 10,000 for the the first time in two weeks.

The surprising drop in new claims for U.S. jobless benefits helped, and created "some anticipation that maybe tomorrow's employment report may be better than expected," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto warned that Friday's key monthly U.S. employment report will be the real test for markets.

"Unemployment is already close to 10 percent, but if it comes out at 10 or above, then there will be worries that the consumers are not there for spending, and that will hurt the market," he said.

Wall Street was also supported by a rally in technology shares after Cisco Systems the network equipment maker, posted a stronger-than-expected quarterly profit. [ID:nN04515993]

The Dow Jones industrial average . ended up 203.82 points, or 2.08 percent, at 10,005.96, while the Standard & Poor's 500 Index .SPX climbed 20.13 points, or 1.92 percent, to 1,066.63. The Nasdaq Composite Index. rose 49.80 points, or 2.42 percent, to 2,105.32.

MSCI's all-country world stock index .MIWD00000PUS rose 0.8 percent while the pan-European FTSEurofirst .FTEU3 ended up 0.6 percent at 990.53 points

Public Storage 3Q Profit Up 73% On Forex,Stock-Offering Gain

Public Storage Inc.'s (PSA) third-quarter profit grew 73% on gains from foreign-currency exchange and an equity offering by PS Business Parks Inc (PSB).

The real-estate investment trust, which has interests in more than 2,000 storage facilities.

WORLD FOREX: Dollar Edges Down Vs Yen Before US Jobs

The dollar edged down against the yen in Asia Friday as some short-term players sold the U.S. currency on the view that a keenly-awaited U.S. jobs report later in the day may show the country's employment conditions worsening.

The U.S. non-farm payrolls report, due at 1330 GMT, may show 175,000 jobs cut in October, economists surveyed by Dow Jones Newswires said. While that would be an improvement on the 263,000 jobs lost in September, the unemployment rate is tipped to rise from 9.8% .

UK company liquidations up 14.6 pct y/y in Q3 - govt

More than 4,700 companies in England and Wales went into liquidation in the third quarter of this year and 35,000 people succumbed to insolvency, official government figures showed on Friday.

The Insolvency Service said company liquidations rose 14.6 percent on a year ago to 4,716. Personal insolvencies rose 28.2 percent on a year ago to 35,242.

PRECIOUS-Gold extends gains above $1,000/oz as dollar slips

LONDON, Oct 5 (Reuters) - Gold prices extended gains above $1,000 an ounce in Europe on Monday, supported by weakness in the dollar in the wake of a meeting of Group of Seven finance ministers at the weekend.

The softer dollar is boosting interest in gold as an alternative asset, analysts said, as well as making the precious metal cheaper for holders of other currencies.

Spot gold XAU= was bid at $1,004.65 an ounce at 0929 GMT, up from $1,001.30 late in New York on Friday. U.S. gold futures for December delivery GCZ9 on the COMEX division of the New York Mercantile Exchange edged up $1.70 to $1,006.00 an ounce.

As well as the weak dollar, gold is also being supported by fears over the sustainability of the recent stock market rally. U.S. equities closed down and European stocks hit a four-week closing low on Friday after weak U.S. non-farm payrolls data.

"Gold is in a period of going sideways, consolidating before the next significant move," said Mitsubishi precious metals strategist Tom Kendall.

"It is (being influenced by) the dollar, but there is also a degree of nervousness among equity investors," he said. "There are some pieces of news that are keeping people wary

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U.S Dollar: Short Term Rebound

U.S.: Rates to remain low, but an exit strategy is ready.

The economic growth is on the move again and some tangible results should be seen shortly. Inventories are being implemented and production is increasing. Spending will improve, along with commodity prices, supported by the world economic recovery. In August, car sales have moved up more than 50% year-on-year in China, India and Brazil. The housing market should continue to show the way in the United States. Housing starts rose 1.5% in August, while existing home sales declined 2.5%, but they remained well above the low registered in November. In effect, during last week FOMC¡¦s meeting, the Fed appeared more optimistic about the economic growth, albeit activity should remain subdued for some time. Durable good orders fell 2.4% (+0.5%) in August, after having increased 4.8% in July. Orders are up overall for the quarter, capital goods orders (excluding aircraft and defense) increased almost 9.0% annualized over the three months, but activity is not strong enough to relief the unemployment rate from the bottom yet. As a result, rates will remain low for now and an exit strategy will be implemented as soon as the economics¡¦ turnaround becomes sustained. The Federal Reserve postponed the timeline for the purchase of mortgage-backed and agency debt to the end of the first quarter of 2010. However, current recovery should be mild, since recapitalization is still in process. The huge deficit will weight on U.S. growth and limit the American economic potential. Unemployment will remain high and savings will increase. Americans are adapting to the new reality, characterized by tight credit and increasing commodity prices, by reducing spending and tempering debt. The strong expansionary cycles of the past are history.

USD Rallies on Soft Manufacturing Data

The greenback advanced against its major rivals in the Wednesday trading session, edging higher against the euro toward the 1.46-level, while pushing the pound sterling to beneath the 1.60-figure and briefly dragging the Swiss franc to a 3-week low at 1.0447. The catalyst for the dollar’s gains was a sharply weaker than forecast report on Chicago PMI. Consensus estimates were looking for the PMI report in edge up higher beyond the key 50-level to 52.0, instead falling to 46.1 in September from a 50-reading in the previous month. The employment component edged up slightly 38.8 from 38.7 in August and the new orders index slumped to 46.3 from 52.5 previously.

The markets largely reacted to the weaker manufacturing figures with the US equity bourses losing ground early in the session and the riskier currencies relinquishing previous session’s gains versus the dollar. The final release of Q2 GDP revealed an improvement to -0.7% from -1.0% in the previous reading while the GDP deflator remained unchanged. The Q2 GDP sales component improved to 0.7%, up from 0.4% previously. Meanwhile, the September ADP private sector payrolls revealed a loss of 254k, versus an upwardly revised loss of 277 jobs from August.

The key highlight this week continues to be Friday’s September labor report. The market is expected the unemployment rate to creep higher to 9.8%, up from 9.7% a month earlier. Non-farm payrolls are seen improving in September, with a loss of 188k jobs compared with 216k jobs shed in August.

Jobs Disappoints, FX Whipsaws

The dollar was initially higher following the September labor report, rallying to 1.4481 against the euro and 1.5806 versus the pound sterling before relinquishing its earlier gains by the New York afternoon. US equities also recovered from its losses in the morning session, clawing their way back into positive territory, with the Dow Jones and Nasdaq up marginally.

Although the September unemployment rate was on par with consensus estimates, the reading still touched a fresh 26-year high at 9.8% versus August at 9.7%. The most disheartening component of the labor data was the non-farm payrolls report, which defied expectations for an improvement to a loss of 180k jobs, instead revealing a considerably larger loss of 263k jobs for September compared with a revised 201k jobs shed in the previous month. Meanwhile, average earnings edged up by less than anticipated, increasing by 0.1% compared with an upwardly revised reading of 0.4% in August and average workweek drifted lower to 33.0 hours from 33.1 hours.

The economic calendar for Friday also included durable goods orders and factory orders. The headline durable goods report declined by 2.6% in August, deteriorating further from the prior month’s 2.4% decline while core durable goods orders fell by 0.3% versus a flat reading previously. Factory orders fell by 0.8% for August, missing estimates for an increase of 0.3% from 1.3% in July.

April 2009 German ZEW Survey

The German ZEW investor confidence survey improved for the sixth consecutive month in April, with the index jumping to a two-year high of 13.0 from -3.5 in the previous month however, the current outlook for the economy slipped to -91.6 from -89.4, which is the lowest since September 2003, as the region faces its worst economic downturn in over half a century. The data suggests investors are holding an improved outlook for the future as policymakers take unprecedented steps to shore up the ailing economy and at the same time, the European Central Bank is expected lower the overnight lending rate to a record-low in May as growth and inflation falter. Meanwhile, the ECB is also anticipated to adopt unconventional measures to manage monetary policy beyond the interest rate to shore up the euro-region however, as the Governing Council fails to meet on common ground, the lack of decisive action could weigh on the outlook for future policy.

March 2009 German ZEW Survey

Investor sentiment in Germany unexpectedly rose to its highest level in nearly two-years as the ZEW survey increased to -3.5 from -5.8 in February. Meanwhile, the gauge which evaluates the current situation of the economy fell to -89.4 from -86.2 in the previous month, and conditions may get worse as Europe’s largest economy faces a deepening recession. As the European Central Bank forecasts the annual rate of growth for the euro-region to contract 2.7% this year, and expects economic activity to remain subdued in 2010, the governing board is anticipated to lower the benchmark interest rate further in an effort to stem the downside risks for growth and inflation. As a result, investors are pricing another 25bp rate cut by the ECB next month however, as President Trichet remains reluctant to overshoot the interest rate, the central bank may adopt additional policy tools as the economic downturn intensifies.

EUR/USD: Trading the German ZEW Investor Confidence Survey

The German ZEW investor confidence survey is expected to improve for the seventh consecutive month in May as economists forecast the index to increase to 20.0 from 13.0 in the previous month however, as the current outlook for the economy is expected to hold near its lowest level since 2003, fears of a deepening downturn could weigh on the exchange rate as region faces its worst recession in over half a century.

Fundamental Outlook for US Dollar: Bullish

Following up on a period of fundamental abundance with dramatic market events (the Fed Stress Test) and high-level economic indicators (non-farm payrolls), the dollar was put through its staid phase this past week. A round of indicators that included the April retail sales and May University of Michigan consumer confidence survey have put the focus back on the supposed ‘green shoots’ that so many policy officials and market commentators have noted recently. This will be the primary concern for dollar traders next week: is the United States leading the gradual economic recovery? However, this broad and speculative fundamental driver will only be able to guide price action if it is not interrupted by a more immediate concern – like a sharp rise or plunge in risk appetite.

Working with the forecast that there will be no unforeseen event that sweeps over the market and stirs sentiment, we will have a series of indicators and meetings that could guide the measured race for establishing the leader of the global economic recovery. As it stands, most of the major, industrial powerhouses are mired in recession; and the immediate outlook is far from promising. However, the currency market is a relative one and speculators are willing to look well into the future to discount the macro trends. So far, the US has shown signs that the pace of deterioration in employment, factory activity, consumer spending, confidence and the housing market are slowing. It should be noted that these trends are not positive, just less aggressive in their decline. And, these cautious ‘improvements’ have put the market at large on watch for ‘green shoots.’ We will see whether the Fed sees the same signs of hope with the minutes from the Federal Open Market Committee’s (FOMC) last policy meeting over April 28-29th. In previously released statements, the group has maintained its forecast for a contraction through the rest of the year and a slow recovery through the first half of 2010. If perhaps the central bankers are more encouraged by recent data, and they project perhaps a recovery sometime before the turn of the year, it would be a big vote for the US outpacing Japan, the UK and perhaps even the Euro Zone.

As for economic indicators, there are no key releases that promise heavy volatility; but there are those that will have their hand in guiding general growth forecasts. The Leading Indicators composite is typically overlooked; but the components of this indicator are exactly what is needed for projecting a true recovery. If there is any theme that can be derived from the docket, it will be the health of the housing market. The NAHB Housing Market Index for May and housing starts and permits data for April will cross the wires Monday and Tuesday. The sector indicator is expected to push an 8-month high (still far from positive territory) and the construction activity gauge is seen ticking higher (through from record lows). This was the area of the economy that triggered the recession. Can it be the source of the recovery?

And, though the market has shifted its attention to the economy; there is no doubt that sentiment will continue to hold the potential influence over the dollar. The greenback is still considered a top safe haven in FX circles; but that can shift should US-specific risks arise. This means we need to not only watch the general level of sentiment in the market but the various currencies’ connection to risk as well. One concern that could easily blow up under the right conditions is the health of the financial system. The Fed’s Stress Test seemed to offer an honest assessment of the state of the country’s largest banks. However, there are many critics that think that floating losses were understated to help pad sentiment until a real recovery can form. If that is the case, an unforeseen shock can send the market’s into another crisis. We will monitor Treasury Secretary Geithner’s testimony on TARP for reasons cracks in the cautious optimism. – JK

US Dollar Rises as Stock Markets, US Index Futures Turn Lower in Asian Trading (Euro Open)

The US Dollar gained against most major currencies as stocks tumbled across Asian exchanges and US equity index futures traded down as much as 1% ahead of the opening bell in London. Overnight data saw New Zealand’s input PPI fell the most since 1976 in the first quarter while Japanese consumer confidence beat economists’ expectations in April.

Short-Term Forex Technical Outlook: EUR/GBP (Update)

The EUR/GBP has held a tight range over the last four-weeks of trading, and the pair may continue to move sideways over the remainder of the month as investors weigh the outlook for future policy.

US Equities and NZD/USD

The correlation between the New Zealand Kiwi, specifically, with the US stock market has become remarkably cut-and-dried of late, which you can see from the chart below. For carry traders, therefore, it probably makes more sense to follow stock market commentary than to track New Zealand economic data. The same economist, for example, warned “that the equities rally, which has seen the broad U.S. Standard & Poor’s 500 index climb 36% from its March low after rising another 3.4% Monday to its highest since Jan. 8, may be dissipating.”

Australian, New Zealand Currencies Benefit from Risk Aversion

Against each other, the New Zealand Kiwi and Australian Dollar have traded in a pretty tight range for the last year (except for a “blip” in the fall of 2008). This makes sense, as both currencies rise and fall in accordance with exports and interest rates.

Euro Resumes Decline After Brief Pause

The one-year chart of the EUR/USD depicts a general downward trend, punctuated with steep “blips.” Every couple of months or so, it seems traders are temporarily jarred loose from their mindset of Euro bearishness, and find an excuse to bid up the common currency. Invariably, the Euro then resumes its downward course a few weeks later.

The Euro’s recent trading activity fits this mold perfectly. The global stock market rally in March was accompanied by a spike in the Euro. While equities, commodities, and even other currencies continued to rise, however, the Euro peaked after a couple weeks and has since hovered around the $1.30 mark. As one currency strategist summarized: “A breakdown of the correlation between the euro-dollar exchange rate and the S&P index indicates the currency pair ‘ has become a trade that is less about risk, a little more about euro rate specifics.’ ”In other words, the decline in risk aversion has not expanded to include the Euro. This is somewhat surprising, since EU economic indicators have rebounded in the last month. The oft-cited German IFO index “rebounded from a 26-year low,” while “retail sales declined the least in 11 months in April after government stimulus packages improved consumer confidence.” On the other hand, EU lending activity, which is more correlated with economic growth, continues to decline. “The European Central Bank Wednesday released figures showing that banks in the currency area cut their lending to both companies and households in March.”

South Africa Hikes Rates, but Interest Rate Differential is Preserved

esterday, the South African Reserve Bank (SARB) lowered its benchmark interest rate by 100 basis points to 8.5%. Since December, the Central Bank has now cut rates by 3.5%, from a high of 12%. [As an aside, the SARB uses a repo rate to conduct policy, as opposed to a discount rate. In theory, a repo rate is slightly unique in that it reflects the rate at which the Central Bank will repurchase government securities from commercial banks. The Federal Funds Rate, in contrast, "is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions." In practice, both rates function as modulators of liquidity in the financial system.]

“The outlook for domestic economic growth remains subdued, with no indications of a quick recovery,” offered the SARB as a rationale for the rate cuts. Activity in manufacturing and mining, two of the cornerstones of the South African economy, have plummeted since the inception of the credit crisis, along with exports and retail sales. As a result, “Central bank Governor Tito Mboweni said April 7 he would ‘not be surprised‘ if the nation’s economy shrank for a second consecutive quarter in the three months through March, following a 1.8 percent contraction in the fourth quarter.” Meanwhile, South Africa’s producer price index (PPI) has declined for seven consecutive months. Coupled with a moderation in food and energy prices, inflation is no longer perceived as a serious problem.

The South African Rand actually rose on the news of the rate cut, as part of a trend that has seen the currency rise nearly 40% since touching a low of 11.7 Rand/Dollar in October. In April alone, “South Africa’s rand, the laggard of 27 major world and emerging-market currencies last year, rallied 12 percent against the dollar.” This reversal of fortune is due largely to the recovery of risk appetite and consequent return of investors to the carry trade.

Reuters Summit - Watchdog mulls new curb on short selling

Cutting the time it takes to settle a trade would largely curb short-selling, a top European Union market regulator said on Tuesday.

Short selling, a practice favoured by some hedge funds, has been criticised for accelerating slides in bank shares and EU states have introduced some curbs.

Share trades in the European Union are typically settled within three days, or T+3, but a top regulator said technology should allow near instantaneous settlement.

'It would reduce the possibility to trade within the settlement cycle,' said Eddy Wymeersch, chairman of the Committee of European Securities Regulators.

'I am amazed that with all the technology that we have today that we could not settle in T+0 and that would largely enable us to eliminate short selling,' Wymeersch said speaking at the Reuters Financial Regulation Summit.

'Are there sufficient technical arguments not to move to real time settlement? Can we not move to a little bit more efficiency. I want to launch a discussion,' Wymeersch said.

CESR groups all the national securities regulators from the 27 European Union member states and is set to play an increasingly influential role in supervising EU markets.

Wymeersch said there were signs of improvement in securities markets in the 27-nation bloc.

'It's very dangerous to say that we are out of the problems but we see some positive signs. The most important one is that the interest rates in the interbank market have come down to absolutely normal conditions and it seems the interbank market has started again,' Wymeersch.

'We also see new inflows into UCITS (pan-EU mutual funds), it's quite significant,' Wymeersh said.

(Reporting by Huw Jones; editing by Simon Jessop) Keywords: REGULATION SUMMIT/SECURITIES

UPDATE 1-Ceradyne Inc quarterly profit, sales fall

The company, which makes ceramic plates used in armor worn by U.S. soldiers, said full-year results would likely come in at the lower end of a previous forecast, citing weakness in European industrial markets.

Net income came to $708,000, or 3 cents a share, down 99 percent from $32.4 million, or $1.18 a share, a year earlier.

Adjusted for interest expense, profit came to 5 cents a share, compared with 20 cents expected by analysts, according to Reuters Estimates.

Sales fell 47 percent to $99.8 million. New orders came to $150.7 million in the quarter, down from $211.8 million a year earlier.

Ceradyne backed its February forecast calling for profit of $1.60 to $2.00 a share for 2009 and sales of $465 million to $500 million, but cited a 'higher probability' of posting results at the low end of the range.

Azerbaijan aims to triple oil shipments to N.America

BAKU, April 28 (Reuters) - Azerbaijan's state oil company, Socar, plans to almost triple crude exports to North America to 200,000 barrels per day, a company official said on Tuesday, without specifying the planned time schedule for the increase.

Nuru Guliyev, Socar's deputy manager for marketing and economics, said his company was looking to open up new markets -- including Canada -- for its Azeri Light crude.

'Only 22 percent of Azeri oil sales are to the American region. The Canadian oil market is young and is growing. Demand there is growing,' Guliyev told a conference.

Azerbaijan, an ex-Soviet country with a coastline on the Caspian Sea, produced 44 million tonnes of oil (about 884,000 bpd) in 2008.

Socar Vice-President Elshad Nasirov told Reuters financial television last month the country plans this year to increase output to at least 50 million tonnes and has no plans to join OPEC in cutting production.

His forecast was higher than the 45 million tonnes predicted in February by a government source.

Socar supplied 73,000 bpd of oil to North America in 2008.

Guliyev said up to 40 percent of Socar's current exports were to the American and Asian markets. In 2006, these markets accounted for only 10 percent to 15 percent of all exports.

'There is demand for Azeri oil, but it's also a question of price,' he told the conference. 'It's one thing to supply oil at a price of $140 a barrel and another at a price of $40-50.'

Socar last year became the main exporter of oil from Azerbaijan, a position it has no intention of relinquishing, Guliyev said.

'(Socar's) exports tripled (last year) to 23 million tonnes. In 2009, we aim to strengthen Socar's role as the main exporter of oil from Azerbaijan,' he said.

Socar also plans this year to double oil flows through the Baku-Novorossiisk pipeline to 2.5 million tonnes, Guliyev said. The pipeline, which links the Azeri capital to the Black Sea, has annual capacity of 5 million tonnes.

This route will only use oil from Socar's old deposits, and not from the Azeri-Chirag-Gyuneshli (ACG) deposit controlled by a BP-led consortium. The ACG deposit is the main source of oil for the Baku-Ceyhan pipeline to the Mediterranean coast.