Inventories

6 Months Ended

Jun. 30, 2020

5. Inventories

Inventories consisted of the following components:


Millions of dollars	June 30, 2020		December 31, 2019
Finished goods	$	2,368	$	3,083
Work-in-process	139		130
Raw materials and supplies	1,261		1,375
Total inventories	$	3,768	$	4,588

Our inventories are stated at the lower of cost or market (“LCM”). Cost is determined using the last-in, first-out ("LIFO") inventory valuation methodology, which means that the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, and as a result we adjust the value of inventory to market value. Fluctuations in the prices of crude oil, natural gas and correlated products from period to period may result in the recognition of charges to adjust the value of inventory to the lower of cost or market in periods of falling prices and the reversal of those charges in subsequent interim periods, within the fiscal year, as market prices recover.

During the first six months of 2020, we recognized LCM inventory valuation charges of $323 million related to the decline in pricing for many of our raw material and finished goods inventories since December 31, 2019. During the second quarter of 2020, we recognized a LCM inventory valuation benefit of $96 million, largely driven by the recovery of market prices of crude oil and refined products during the second quarter.