DERIVATIVES

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company entered into the Inventory Intermediation Agreements that contain purchase obligations for certain volumes of crude oil, intermediates and refined products. The purchase obligations related to crude oil, intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying crude oil, intermediates and refined products. The level of activity for these derivatives is based on the level of operating inventories.

As of June 30, 2020, there were no barrels of crude oil and feedstocks (27,580 barrels at December 31, 2019) outstanding under these derivative instruments designated as fair value hedges. As of June 30, 2020, there were 2,949,375 barrels of intermediates and refined products (3,430,635 barrels at December 31, 2019) outstanding under these derivative instruments designated as fair value hedges. These volumes represent the notional value of the contract.

The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of June 30, 2020, there were 9,800,000 barrels of crude oil and 771,000 barrels of refined products (5,511,000 and 5,788,000, respectively, as of December 31, 2019), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.

The Company also uses derivative instruments to mitigate the risk associated with the price of credits needed to comply with various governmental and regulatory environmental compliance programs. For such contracts that represent derivatives, the Company elects the normal purchase normal sale exception under ASC 815, Derivatives and Hedging, and therefore does not record them at fair value.

The following tables provide information about the fair values of these derivative instruments as of June 30, 2020 and December 31, 2019 and the line items in the Condensed Consolidated Balance Sheets in which the fair values are reflected.


Description	Balance Sheet Location	Fair Value Asset/(Liability)
		(in millions)
Derivatives designated as hedging instruments:
June 30, 2020:

Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	24.4
December 31, 2019:

Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	(1.3)

Derivatives not designated as hedging instruments:
June 30, 2020:
Commodity contracts	Accrued expenses	$	(6.0)

December 31, 2019:
Commodity contracts	Accounts receivable	$	0.2

The following table provides information about the gains or losses recognized in income on these derivative instruments and the line items in the Condensed Consolidated Statements of Operations in which such gains and losses are reflected.


Description	Location of Gain or (Loss) Recognized in Income on Derivatives	Gain or (Loss) Recognized in Income on Derivatives
		(in millions)
Derivatives designated as hedging instruments:
For the three months ended June 30, 2020:

Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(42.2)
For the three months ended June 30, 2019:

Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(20.8)
For the six months ended June 30, 2020:

Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	25.7
For the six months ended June 30, 2019:

Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(35.0)

Derivatives not designated as hedging instruments:
For the three months ended June 30, 2020:
Commodity contracts	Cost of products and other	$	(13.2)
For the three months ended June 30, 2019:
Commodity contracts	Cost of products and other	$	1.0
For the six months ended June 30, 2020:
Commodity contracts	Cost of products and other	$	65.0
For the six months ended June 30, 2019:
Commodity contracts	Cost of products and other	$	32.7

Hedged items designated in fair value hedges:
For the three months ended June 30, 2020:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	42.2
For the three months ended June 30, 2019:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	20.8
For the six months ended June 30, 2020:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	(25.7)
For the six months ended June 30, 2019:

Crude oil, intermediate and refined product inventory	Cost of products and other	$	35.0

The Company had no ineffectiveness related to the fair value hedges for the three and six months ended June 30, 2020 or 2019, respectively.