SHARES in Royal Dutch/Shell Group surged in London and Amsterdam yesterday after the Anglo Dutch oil giant reported its best ever quarterly results.

Analysts scrambled to raise their full year profit estimates after their expectations were easily surpassed by a 24 per cent jump in first quarter net profit excluding special items to £1.54 billion from £1.24 billion.

Royal Dutch/Shell, one of the world's biggest companies, said results were boosted by higher oil prices and increased gas sales following a harsh winter in the US and Europe.

Firmer refining margins had also helped offset lower chemical earnings.

"They (the first quarter profits) make clear that the poor fourth quarter results were an aberration, clearing the decks for a much better 1996," said Mr Fergus Mcleod, analyst at NatWest Securities in London.

The oil company is 60 per cent owned by Royal Dutch Petroleum of the Netherlands. Britain's Shell Transport and Trading owns the remainder.

In Amsterdam, Royal Dutch shares climbed 10.30 guilders (£3.90) higher to 248.50 guilders in late afternoon trade, while Shell rose 35p to 886 1/2p in London.

Analysts said they underestimated the effect of the cold spell that hit both sides of the north Atlantic. Refining margins in the Far East were also better than they had forecast.

One industry watcher, however, warned against too much optimism as the oil price outlook remains cloudy after an unexpected rise of about $1.50 (£0.95) per barrel in the first quarter.

Apart from the cold weather this was also the result of low stocks in the US and lower than expected production in non OPEC countries.

Royal Dutch/Shell itself said it expected prices to remain volatile during the rest of the year, "reflecting in part the possible resumption later this year of oil exports from Iraq".

Iraq and the United Nations are still holding protracted talks to strike a food for oil deal which would allow the country to sell into the world market up to $2 billion of crude.

Higher gas sales, rising oil prices and lower costs raised earnings from exploration and production by 53 per cent before special items.

Worldwide refining margins rose in the first three months of 1996, but Royal Dutch/Shell said they had already fallen from their peaks in the Asia Pacific in the current quarter.

Margins in this region may well stay below their first quarter average, the company added.

Chemical results were sharply down compared with the equivalent 1995 period, but were up on 1995's fourth quarter, with the rise notably taking place outside the US.

"The steep price reduction experienced in the second half of 1995 has levelled off and there are now signs of firming up of some product prices", Royal Dutch/Shell said.

Chemical prices soared early last year, but slumped later as users began to run down stocks.

Cash flow rose to £2.5 billion from £1.8 billion. As capital expenditure remained unchanged at £1.5 billion, hopes were raised that the group may dig deep into its pockets to announce a special dividend or a share buy back.

"It's too early to say, but things are clearly pointing in that direction," said Mr Mcleod. "The company is in danger of moving into a net cash position."