Refining margins throughout the world have remained low in 1996. In Europe, in spite of an improvement, particularly during the last few weeks, they are still not high enough to finance new investments. Although the demand for petroleum products is increasing, experts are still sceptical about any rapid recovery due to prevailing overcapacity and to continuing capacity growth. After a historical review of margins and an analysis of margins by regions, we analyse refining overcapacities in Europe and the unbalances between production and demand. Then we discuss the current situation concerning barriers to the rationalisation, agreements between oil companies, and the consequences on the future of refining capacities and margins.