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By Libby George
LONDON, April 16 (Reuters) - Cheap oil has pushed motoristsback to their old gas guzzling habits, unexpectedly helpingextend record profits and crude processing for refiners aroundthe world.
Tumbling prices for crude oil, which is refined intocostlier products such as gasoline, diesel and naphtha, haveimproved margins for refiners after years of low profits.
But the rush to cash in led to fears of a storage glut inoil products, and the industry has been bracing for aprofitability crash for months due to massive newstate-of-the-art refineries in the Middle East.
New plants in Asia and North America too are also expectedto flood the world with diesel, jet fuel and gasoline before theend of the year, but a buyer-led reprieve has extended rosymargin expectations.
"There are still a few more months of good margins," Jonathan Leitch, research director with Wood Mackenzie, said."The mini golden age for refining goes on a bit longer."
This is giving a boost to the major oil companies that ownthem, and could enable refining to partially counteract the poorperformance of oil majors' other divisions for a full year.
While refiners' earnings, as part of so-called "downstream",usually account for a small fraction of overall profits duringperiods of high oil prices, they generated at least a third ofoverall net income for majors such as Shell, Total and BP in the fourth quarter, helping offsetlosses from plunging crude prices.
HALCYON DAYS
Analysts had expected refiners' halcyon days to endfollowing autumn maintenance last year, then after winterheating demand, and now some expect margins could stay firmenough to encourage high utilization well into the summer.
"As usually happens, the market does what you least expectit to do," said Leitch, adding the consumption and subsequentlylimited product stock build "takes a lot of pressure off"refinery margins through to the middle of the year.
Both Wood Mackenzie and Energy Aspects are now forecastingsecond-quarter margins comfortably above the same time lastyear.
Enery Aspects pegs second-quarter cracking margins - thedifference between the product wholesale value and the value ofcrude - versus Brent in northwest Europe at around $6.50, nearto $5 per barrel in Singapore versus Dubai crude and around $9per barrel versus Louisiana Light Sweet in the U.S. Gulf Coast.
"We think demand is much stronger. People are driving moreand using more fuel," said Robert Campbell of Energy Aspects."It's probably one of the big supports to the market right now."
Drivers in the United States clocked 237.3 billion miles inJanuary, a record for the month, and the country, the world'slargest oil products consumer, is on track to consume the mostgasoline this year since at least 2008.
India's gasoline demand grew by double digits year-on-yearfor three consecutive months, according to government data,pushing February oil products consumption to an all-time high ofnearly 4 million barrels per day.
Despite slowing Chinese economic growth, sales offuel-intensive sports utility vehicles are expected to keepgasoline growth at a just under 8 percent.
In Europe, cold weather and demand growth in Spain, Germanyand France held gasoil volumes stored in the ARA hub at justover 50 percent of capacity at the beginning of April, accordingto Genscape, lower than the 52 percent at the same time lastyear.
"We've not seen the stock builds on products that some wereexpecting, and nothing is coming anywhere near where we seecrude builds," said Andrew Wilson, the IEA's analyst for stocksand statistics. "We think there is still a lot of capacity to befilled." (Additional reporting by Robert Gibbons and Catherine Ngai;editing by Susan Thomas)
