NEW YORK, April 30 (Reuters) - Traders are rushing to

fill up storage tanks along the U.S. East Coast with distillate

fuels, like diesel and heating oil, data from storage broker The

Tank Tiger showed on Monday, a sign of deepening oversupply that

is weighing on refiners' profits.

Largely warmer-than-expected winter weather in U.S.

Northeast and Europe has cut distillates demand and hit

refiners' margins across the globe in recent months, a factor

that drove softer first-quarter earnings by oil majors and top

independent refiners.

Spreads between U.S. crude and diesel futures

, or "cracks" that reflect refining margins, have

dropped more than 30% so far this year to under $25 a barrel.

Struggling to find outlets for their excess distillates,

traders are scrambling to park it in storage tanks in New York

Harbor, The Tank Tiger Chief Operating Officer Steven Barsamian

said. Storing in the Harbor allows them to export to Europe

later in the year when demand improves, he added.

Distillates storage demand at New York Harbor jumped to

around 300,000 barrels this month, from virtually no bidder

interest in March, data from storage firm The Tank Tiger showed.

The Tank Tiger's storage demand data measures bidder interest in

leasing storage tanks.

Distillates in storage rose by a surprise 1.6 million

barrels in the week ended April 19 to 116.6 million barrels, as

demand fell 5% from the prior year to 3.55 million barrels per

day, the weakest for this time since 2022, government data

showed.

Rising stocks and weak demand pushed diesel futures into

contango in recent weeks, a market structure where a commodity's

current prices are lower than future prices. The shift marked

the first time that has happened since 2021 in Europe

and first time since June 2023 in the U.S.

"The bidding up of prompt storage is likely caused by

some that think owning this now at lower costs means that

distillates will start to jump well above gasoline going into

the winter season," a refined products broker focused on the New

York Harbor market said.

U.S. refiner Phillips 66 echoed that view on a

conference call with analysts after its first-quarter earnings

last week.

Refineries along the East Coast and West are switching to

producing more gasoline than distillates, which should allay

some of the oversupply and help margins recover, the company

said.

"We are constructive. We do think the market will come

back," Brian Mandell, Phillips 66's executive vice president of

Marketing and Commercial said in response to questions on weaker

diesel cracks.

Diesel cracks are also very seasonal with natural

winter-strength and likewise, natural summer weakness, said

Bjarne Schieldrop, SEB's chief commodities analyst.

"There is a lot of focus on weakness in diesel demand

and cracks. But we need to remember that we saw the same

weakness last spring before the diesel cracks rallied into the

rest of the year," he added.