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Derivative Instruments | 9 Months Ended
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Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments From time to time, we enter into forward fuel contracts to limit the exposure to price fluctuations for physical purchases of finished products in the normal course of business. We use derivatives to reduce the impact of market price volatility on our results of operations. Typically, we enter into forward fuel contracts with major financial institutions in which we fix the purchase price of finished grade fuel for a predetermined number of units with fulfillment terms of less than 90 days. From time to time, we may also enter into interest rate hedging agreements to limit floating interest rate exposure under the DKL Credit Facility. The following table presents the fair value of our derivative instruments as of September 30, 2018 and December 31, 2017. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including any cash deficit or collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our accompanying condensed consolidated balance sheets. During the three and nine months ended September 30, 2018 and 2017, we did not elect hedge accounting treatment for these derivative positions. As a result, all changes in fair value are marked to market in the accompanying condensed consolidated statements of income and comprehensive income. See Note 13 for further information regarding the fair value of derivative instruments.
(in thousands) |  |  |  | September 30, 2018 |  | December 31, 2017
Derivative Type |  | Balance Sheet Location |  | Assets |  | Liabilities |  | Assets |  | Liabilities
Derivatives: |  |  |  |  |  |  |  |
Commodity derivatives (1) |  | Accrued expenses and other current liabilities |  | $ | — |  |  | $ | (126 | ) |  | $ | — |  |  | $ | (1,087 | )
Total gross fair value of derivatives |  | — |  |  | (126 | ) |  | — |  |  | (1,087 | )
Less: Counterparty netting and cash deficit (collateral) (2) |  | — |  |  | 136 |  |  | — |  |  | (290 | )
Total net fair value of derivatives |  | $ | — |  |  | $ | (262 | ) |  | $ | — |  |  | $ | (797 | )
(1) As of September 30, 2018 and December 31, 2017, we had open derivative contracts representing 38,000 barrels and 370,000 barrels, respectively, of refined petroleum products. (2) As of September 30, 2018 and December 31, 2017, we had a cash deficit of $0.1 million and cash collateral of $0.3 million, respectively, netted with the net derivative position of our counterparty. Recognized gains (losses) associated with our derivatives for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands):
|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
Derivative Type | Income Statement Location |  | 2018 |  | 2017 |  | 2018 |  | 2017
Commodity derivatives | Cost of materials and other |  | $ | (33 | ) |  | $ | (1,474 | ) |  | $ | 707 |  |  | $ | (358 | )

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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