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DERIVATIVES | 6 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES |
NOTE 6 - DERIVATIVES
OBJECTIVE AND STRATEGY Occidental uses a variety of derivative financial instruments and physical contracts to manage its exposure to commodity price fluctuations and transportation commitments and to fix margins on the future sale of stored commodity volumes. Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. Occidental may occasionally use a variety of derivative financial instruments to manage its exposure to foreign currency fluctuations and interest rate risks. Occidental also enters into derivative financial instruments for trading purposes. Occidental may elect normal purchases and normal sales exclusions when physically delivered commodities are purchased or sold to a customer. Occidental occasionally applies cash flow hedge accounting treatment to derivative financial instruments to lock in margins on the forecasted sales of its natural gas storage volumes, and at times for other strategies, such as to lock in rates on debt issuances. The value of cash flow hedges was insignificant for all periods presented. As of June 30, 2024, Occidental’s marketing derivatives are not designated as hedges. MARKETING DERIVATIVES Occidental's marketing derivative instruments are short-duration physical and financial forward contracts. As of June 30, 2024, the weighted-average settlement price of these forward contracts was $81.31 per barrel and $2.10 per Mcf for crude oil and natural gas, respectively. The weighted-average settlement price was $76.36 per barrel and $2.62 per Mcf for crude oil and natural gas, respectively, as of December 31, 2023. Derivative instruments that are not designated as hedging instruments are required to be recorded on the balance sheet at fair value. Changes in fair value will impact Occidental’s earnings through mark-to-market adjustments until the physical commodity is delivered or the financial instrument is settled. Net gains and losses associated with marketing derivative instruments are recognized currently in net sales. The following table summarizes net short volumes associated with the outstanding marketing commodity derivatives as of:
long (short) | June 30, 2024 | December 31, 2023
Oil commodity contracts |  |
Volume (MMbbl) | (54) |  | (20) |
Natural gas commodity contracts |  |
Volume (Bcf) | (254) |  | (113) |
FAIR VALUE OF DERIVATIVES The following tables present the fair values of Occidental’s outstanding derivatives. Fair values are presented at gross amounts below, including when the derivatives are subject to netting arrangements, and are presented on a net basis in the Consolidated Condensed Balance Sheets:
millions | Fair Value Measurements Using | Netting (a) | Total Fair Value
Balance Sheet Classifications | Level 1 | Level 2 | Level 3
June 30, 2024 |  |  |  |  |
Marketing Derivatives |  |  |  |  |
Other current assets | $ | 881 |  | $ | 115 |  | $ | — |  | $ | (952) |  | $ | 44 |
Other long-term assets | 1 |  | 1 |  | — |  | — |  | 2 |
Accrued liabilities | (907) |  | (96) |  | — |  | 952 |  | (51) |
Deferred credits and other liabilities - other | — |  | — |  | — |  | — |  | — |
December 31, 2023 |  |  |  |  |
Marketing Derivatives |  |  |  |  |
Other current assets | $ | 1,008 |  | $ | 100 |  | $ | — |  | $ | (1,009) |  | $ | 99 |
Other long-term assets | 47 |  | 1 |  | — |  | (43) |  | 5 |
Accrued liabilities | (967) |  | (64) |  | — |  | 1,009 |  | (22) |
Deferred credits and other liabilities - other | (43) |  | (6) |  | — |  | 43 |  | (6) |
(a)These amounts do not include collateral. Occidental netted $1 million of collateral received with brokers against derivative assets and $25 million of collateral deposited with brokers against derivatives liabilities as of June 30, 2024 and netted $42 million of collateral received from brokers against derivative assets as of December 31, 2023. GAINS AND LOSSES ON DERIVATIVES The following table presents net losses related to Occidental's derivative instruments and the location on the Consolidated Condensed Statements of Operations.
millions | Three months ended June 30, | Six months ended June 30,
Income Statement Classification | 2024 | 2023 | 2024 | 2023
Marketing Derivatives (included in Net sales) | $ | (58) |  | $ | (136) |  | $ | (296) |  | $ | (142) |
CREDIT RISK The majority of Occidental’s counterparty credit risk is related to the physical delivery of energy commodities to its customers and their potential inability to meet their settlement commitments. Occidental manages credit risk by selecting counterparties that it believes to be financially strong, by entering into netting arrangements with counterparties and by requiring collateral or other credit risk mitigants, as appropriate. Occidental actively evaluates the creditworthiness of its counterparties, assigns appropriate credit limits and monitors credit exposures against those assigned limits. Occidental also enters into futures contracts through regulated exchanges with select clearinghouses and brokers, which are subject to minimal credit risk, if any.

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