* Sees Q1 earnings higher than in Q4
* Refining margins beat Q4 worldwide, except NW Europe
* Jan-Feb U.S. average output down vs Q4
* Overall oil-equivalent output 2.75 mln bpd, down vs Q4
* Shares down slightly after hours (Adds byline, share price, analyst comment, background, detail)
By Braden Reddall
SAN FRANCISCO, April 11 (Reuters) - Chevron Corp (CVX.N), the second-largest U.S. oil company, sees better earnings in the first quarter than in the previous quarter as rising energy demand boosted oil prices and most refining margins.
The exception on refining was a decrease in profitability in northwest Europe, likely due to the impact of North African supply disruptions on the prices of oil those refiners buy.
In the first official view of last quarter from a leading oil company, Chevron said refining margins generally had improved on the previous quarter, as oil usage increased along with an improving economy.
"Most of these companies were breaking even in refining a year ago," said Brian Youngberg, oil analyst at Edward Jones. "The improvement has been dramatic.
Chevron also said on Monday that first-quarter exploration and production earnings would be higher than in the previous quarter, despite a decline in production.
Chevron said in its interim trading update that average U.S. oil-equivalent output in January and February was 686,000 barrels per day (bpd) compared with 698,000 in the fourth quarter, and down from 734,000 bpd a year earlier. The company said this reflected small declines across multiple assets.
International output fell to 2.062 million bpd in the first two months of the quarter from 2.088 million a quarter before, as higher prices left more production in the hands of partners. There were also disruptions due to weather in Australia and Britain and maintenance in Angola, the company said.
All together, Chevron reported about 2.75 million bpd of oil-equivalent production for the first two months of the quarter, down from nearly 2.79 million in the fourth quarter.
Chevron is targeting average 2011 production of 2.79 million barrels, or 1 percent growth. Domestic output will get a bit of a lift with the closing of its acquisition of Atlas Energy Inc ATLS.O. [ID:nN09162177]
Benchmark U.S. oil prices CLc1 averaged $95 per barrel in the first quarter, up from $79 in the same quarter in 2010 and $10 higher than the fourth. The average first-quarter price of Brent futures in London was $5 above its U.S. equivalent.
Chevron said its downstream earnings in the first quarter would be hit by marking down the value of open derivative contracts tied to actual oil in its possession.
Shares of the company, up 18 percent since the start of 2011, were down 28 cents in after-hours trading on Monday. The stock had closed 1.7 percent lower, in line with a drop in crude prices CLc1 on the day.
Chevron said charges related to corporate and other activities would be at the high end of its standard guidance of $250 million to $350 million. The San Ramon, California-based company is due to report first-quarter results on April 29. (Additional reporting by Erwin Seba; Editing by Steve Orlofsky)