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Derivative Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
Commodity Price Risk Management
Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

Foreign Currency Risk Management
We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward and foreign exchange swap contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

Accounting Hedges
We have swap contracts serving as cash flow hedges against price risk on forecasted purchases of natural gas. We also periodically have swap contracts to lock in basis spread differentials on forecasted purchases of crude oil and forward sales contracts that lock in the prices of future sales of crude oil and refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income. These fair value adjustments are later reclassified to earnings as the hedging instruments mature.

The following table presents the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of hedging instruments under hedge accounting:
Net Unrealized Gain (Loss) Recognized in OCIGain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging InstrumentsYears Ended December 31,Income Statement LocationYears Ended December 31,
202020192018202020192018
(In thousands)
Commodity contracts$(4,871)$(5,349)$11,221 Sales and other revenues$(5,168)$(1,799)$(5,093)
Cost of products sold4,281 22,876 — 
Operating expenses(1,717)(1,364)(962)
Total$(4,871)$(5,349)$11,221 $(2,604)$19,713 $(6,055)
Economic Hedges
We have commodity contracts including NYMEX futures contracts to lock in prices on forecasted purchases and sales of inventory and forward purchase and sell contracts, as well as periodically have contracts to lock in basis spread differentials on forecasted purchases of crude oil and swap contracts to lock in the crack spread of WTI and gasoline, that serve as economic hedges (derivatives used for risk management, but not designated as accounting hedges). We also have forward currency contracts to fix the rate of foreign currency. In addition, our catalyst financing arrangements discussed in Note 13 could require repayment under certain conditions based on the future pricing of platinum, which is an embedded derivative. These contracts are measured at fair value with offsetting adjustments (gains / losses) recorded directly to income.

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:
Gain (Loss) Recognized in Earnings
Derivatives Not Designated as Hedging InstrumentsYears Ended December 31,
Income Statement Location202020192018
(In thousands)
Commodity contractsCost of products sold$18,646 $(8,475)$16,655 
Interest expense(4,250)(6,427)(198)
Foreign currency contractsGain on foreign currency transactions(7,300)(17,430)41,834 
Total$7,096 $(32,332)$58,291 


As of December 31, 2020, we have the following notional contract volumes related to outstanding derivative instruments (all maturing in 2021):

Total Outstanding NotionalUnit of Measure
Derivatives designated as hedging instruments:
Natural gas price swaps - long1,800,000 MMBTU
Derivatives not designated as hedging instruments:
NYMEX futures (WTI) - short
160,000 Barrels
Forward gasoline and diesel contracts - long
195,000 Barrels
Foreign currency forward contracts
418,192,532 U. S. dollar
Forward commodity contracts (platinum)
40,867 Troy ounces
The following table presents the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.
Derivatives in Net Asset PositionDerivatives in Net Liability Position
Gross AssetsGross Liabilities Offset in Balance SheetNet Assets Recognized in Balance SheetGross LiabilitiesGross Assets Offset in Balance SheetNet Liabilities Recognized in Balance Sheet
 (In thousands)
December 31, 2020
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts
$— $— $— $359 $— $359 
$— $— $— $359 $— $359 
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts$— $— $— $418 $— $418 
Commodity forward contracts275 — 275 196 — 196 
Foreign currency forward contracts
— — — 23,005 — 23,005 
$275 $— $275 $23,619 $— $23,619 
Total net balance$275 $23,978 
Balance sheet classification:Prepayment and other$275 Accrued liabilities$23,978 

Derivatives in Net Asset PositionDerivatives in Net Liability Position
Gross AssetsGross Liabilities Offset in Balance SheetNet Assets Recognized in Balance SheetGross LiabilitiesGross Assets Offset in Balance SheetNet Liabilities Recognized in Balance Sheet
 (In thousands)
December 31, 2019
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts
$7,526 $(1,784)$5,742 $1,230 $— $1,230 
$7,526 $(1,784)$5,742 $1,230 $— $1,230 
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts$— $— $— $2,578 $— $2,578 
Commodity price swap contracts
7,713 — 7,713 — — — 
Commodity forward contracts4,133 — 4,133 3,685 — 3,685 
Foreign currency forward contracts
— — — 6,722 — 6,722 
$11,846 $— $11,846 $12,985 $— $12,985 
Total net balance$17,588 $14,215 
Balance sheet classification:Prepayments and other$17,588 Accrued liabilities$12,985 
Other long-term liabilities1,230 
$17,588 $14,215 

At December 31, 2020, we had a pre-tax net unrealized loss of $0.4 million classified in accumulated other comprehensive income that relates to all accounting hedges having contractual maturities through 2021, which assuming commodity prices remain unchanged will be effectively transferred from accumulated other comprehensive income into the statement of income as the hedging instruments contractually mature over the next twelve-month period.