New Zealand Refining Company margins picked up in the two-months to February up from a five-year low last year, but the company is not expecting a smooth ride ahead.

Margins improved from $US1.18 a barrel (gross refining margin or GRM) in November/December to $US6.85 to February.

But the company said although margins started to recover in December 2009, it was premature to think further improvement signalled a sustained recovery.

The company expects volatile few months.

The Marsden Point refinery continued operating at full capacity in January and February, with a 7.0 million barrels throughput, compared to 7.2 million barrels for November and December 2009.

The processing fee was also higher, rising from $8.2 million in the previous two months to $47.2 million in the January/February period.

Shares (NZX:NZR) last traded up 0.05 cents to $3.50.