2013 due to historically high inventories stemming from strong growth in domestic production and limitations on outbound pipeline capacity from the U.S. midcontinent. After narrowing during the first six months of 2013, the WTI discount slowly widened into the fourth quarter as seasonal refinery turnarounds contributed to surplus supply conditions for WTI, while Brent prices were supported by supply disruptions due to international events.

A differential in crude oil prices exists between high-quality (high-gravity, low-sulfur) crudes and those of lower quality (low-gravity, high-sulfur). The amount of the differential in any period is associated with the supply of heavy crude versus the demand, which is a function of the capacity of refineries that are able to process this lower quality feedstock into light products (motor gasoline, jet fuel, aviation gasoline and diesel fuel). During 2013, the differential between North American light and heavy crude oil remained below historical norms due to growth in U.S. light sweet crude production in the midcontinent region and pipeline capacity constraints at Cushing. Outside of North America, the light-heavy crude differential narrowed modestly in 2013 as supply disruptions in key producing countries tightened light sweet crude markets and additional heavy crude oil conversion capacity came online.

Chevron produces or shares in the production of heavy crude oil in California, Chad, Indonesia, the Partitioned Zone between Saudi Arabia and Kuwait, Venezuela and in certain fields in Angola, China and the United Kingdom sector of the North Sea. (See page FS-10 for the company’s average U.S. and international crude oil realizations.)

In contrast to price movements in the global market for crude oil, price changes for natural gas in many regional markets are more closely aligned with supply-and-demand conditions in those markets. In the United States, prices at Henry Hub averaged $3.70 per thousand cubic feet (MCF) during 2013, compared with $2.71 during 2012. As of mid-February 2014, the Henry Hub spot price was $5.53 per MCF. Fluctuations in the price of natural gas in the United States are closely associated with customer demand relative to the volumes produced in North America.

Outside the United States, price changes for natural gas depend on a wide range of supply, demand and regulatory circumstances. In some locations, Chevron is investing in long-term projects to install infrastructure to produce and liquefy natural gas for transport by tanker to other markets. International natural gas realizations averaged about $5.91 per MCF during 2013, compared with $5.99 per MCF during 2012. (See page FS-10 for the company’s average natural gas realizations for the U.S. and international regions.)

The company’s worldwide net oil-equivalent production in 2013 averaged 2.597 million barrels per day. About one-fifth of the company’s net oil-equivalent production in 2013 occurred in the OPEC-member countries of Angola, Nigeria, Venezuela and the Partitioned Zone between Saudi Arabia and Kuwait. OPEC quotas had no effect on the company’s net crude oil production in 2013 or 2012. At their December 2013