UPDATE 1-S-Oil expects Q3 refining margins to rebound on rising fuel demand

(Adds quarterly profit, share move)

SEOUL, July 27 (Reuters) - South Korea’s S-Oil Corp said on Tuesday that refining margins are expected to rebound in the third quarter, driven by high demand for transport fuels because of an increase in global economic activities and mobility.

S-Oil is the country’s third-largest oil refiner and its main shareholder is state-owned oil company Saudi Aramco .

S-Oil reported on Tuesday an operating profit of 571 billion won ($496 million) for the second quarter.

Operating income in the second quarter at its oil refining business was 152.5 billion won from revenue of 4.85 trillion won.

That resulted in a profit margin of 3.1%, down from 9% in the first quarter but higher than minus 13.8% in the same period a year ago.

The company said it operated the crude distillation units at its 669,000 barrels-per-day refinery in the southeastern city of Ulsan at 98.8% of capacity on average in the April-June period, up from 94.4% in the first quarter.

Shares of S-Oil were up 3.1% as of morning trade, while the wider market was trading 0.8% higher.

$1 = 1,150.1800 won Reporting by Joyce Lee; Editing by Tom Hogue and Christian Schmollinger