* Diesel, gasoline stocks to drop due to autumn refinerywork
* Stock declines to support refining margins
* But profits to remain under pressure
By Ron Bousso and Libby George
LONDON, Aug 24 (Reuters) - Oil refiners reeling fromtumbling profits can expect some reprieve in the coming weeks aslower production will tame a huge global excess of gasoline anddiesel.
Dozens of plants that will switch off for regular autumnmaintenance will help slow the downward spiral in margins (theprofit from refining crude into oil products) that have fallento barely break even in 2016 from highs of around $11 a barrel ayear earlier, analysts said.
Refining profits have been a vital bulwark for the likes ofRoyal Dutch Shell, BP, Eni and Repsol, helping to offset losses from crude oil production ina more than two-year price rout.
European refinery turnarounds are set to peak at around 1.1million barrels per day (bpd) in mid-September before graduallytapering off throughout October, according to Reuters data andtraders.
Though last minute maintenance announcements could increasethe balance, it remains significantly lower than last year, whenit peaked at around 2.3 million bpd.
Globally, maintenance is expected to be more significant,particularly in export hubs in the Middle East and Asia, takingoff around 5 million bpd of capacity at the peak, roughly 7percent of global refinery throughput.
"No one is seeing the same sort of margins we saw a yearago, but nor are they falling off a cliff," said David Fyfe,head of market research at Switzerland-based trader Gunvor,which owns three refineries in northern Europe.
EQUILIBRIUM
Unplanned outages in the U.S. Gulf Coast, a major exporthub, including at ExxonMobil's 502,500 bpd Baton Rougerefinery, are further helping reduce the glut.
A cold winter would further eat into stocks of heating oil.
All this will likely help deplete brimming gasoline anddiesel stocks, a result of excessive production earlier thisyear when prices of crude oil feedstock were low and demandexpectations were high.
"We're approaching a state of equilibrium in the sense thatdemand is matching quite closely with what refineries canproduce," said Jonathan Leitch, oil product markets researchdirector at Wood Mackenzie.
The overhang in developed economies of middle distillates,which include diesel and heating oil, is at around 72 millionbarrels or around four days of consumption, a reasonable levelgiven limited spare refining capacity, according to Fyfe.
Gasoline faces an overhang of 30 million barrels, roughlytwo days of forward cover.
Robert Campbell, head of oil products markets at consultancyEnergy Aspects said refining margins, or cracks, are unlikely tosurge even though European diesel stocks are expected to declineby 4 to 6 million barrels in September.
"All of this sounds very bullish, but a good deal of thisstory may already be priced in. European diesel cracks haverallied from their lows in recent weeks, but cannotrealistically go much higher," according to Campbell.
"Margins don't look great going into September butmaintenance, even if it is small, will keep people afloat for awhile."
Chances for a new tidal wave of refined oil products onceautumn maintenance is completed are diminishing as 2016 and 2017will see far less new refinery capacity come on line compared tolast year, Fyfe said.
(Editing by William Hardy)
