Energy stocks closed lower, dramatically lagging the broader markets for a second straight day, on weakness in commodity prices. Refiners were the lone oil and gas sub-industry to close in the green, benefiting from the improvement in crack spreads, while equipment and drillers were the chief laggards.

WTI crude oil sank $3.31 or 3.47% to $91.98 as Saudi efforts to tame prices and a much bigger-than-expected rise in U.S. crude inventories after Storm Isaac fuelled a third day of heavy fund liquidation, one of the biggest sell-offs in more than a year. European benchmark Brent crude crashed below the 50- and 200-day moving-average, sparking technical selling that pushed it to the lowest in six weeks. Big hedge funds were seen liquidating bullish positions built ahead of the Federal Reserves' third dose of stimulus, announced last week.

Natural gas futures fell $0.011 or 0.40% to $2.762, as milder autumn weather blanketing much of the nation curbed late-season air conditioning demand and any early-season heating demand. Technical traders noted prices bounced early from an oversold condition following a 9.5 percent slide in the previous four sessions, but concerns about fading weather demand brought out the sellers. Traders and analysts polled by Reuters expect inventories to have gained 64 billion cubic feet in Thursday's EIA storage report.

U.S. INTERGRATEDS

Press Release - Chevron Corporation announced further drilling success by its Australian subsidiary in the Greater Gorgon Area, located in the Carnarvon Basin, a premier hydrocarbon basin. The Satyr-2 exploration discovery well confirmed approximately 128 feet (39 meters) of net gas pay. The well is located in the WA-374-P permit area approximately 75 miles (120 kilometers) northwest of Barrow Island off the Western Australian coast. The well was drilled in 3,570 feet (1,088 meters) of water to a total depth of 12,454 feet (3,796 meters). Satyr-2 is Chevron’s fifteenth discovery in Australia since mid-2009.

Reuters - ExxonMobil said it will be performing maintenance on a flexicoker unit at its 560,640 barrel-per-day Baytown, Texas, refinery for several weeks.

INTERNATIONAL INTERGRATEDS

Reuters - BP's oil leak at the Ula field in Norway is considered serious because its location posed a risk to the facility itself but the spill was contained and does not currently pose an environment risk, the Petroleum Safety Authority said.

(Late Tuesday) Reuters - BP has been in talks to sell its 400,780 barrel per day (bpd) Texas City, Texas, refinery to Marathon Petroleum Corp, according to a report posted by the Financial Times on its website on Tuesday.

Reuters - Italian oil group Eni said on Wednesday it had discovered a new onshore gas field in Pakistan with about 8.5-11.5 billion cubic meters of gas in place.

Reuters - The United States District Court has dropped a probe into a former unit of Italian oil and gas group Eni over corruption charges in Nigeria, Eni said on Wednesday.

Reuters - Russia's Gazprom plans to make a final investment decision on a proposed liquefied natural gas (LNG) terminal in Vladivostok early next year, said Victor Timoshilov, the head of the company's Oriental Projects Coordination Directorate.

Reuters - Russian state oil firm Rosneft is talking to banks about raising $15 billion in debt financing as it inches towards a deal to buy BP's one-half stake in Anglo-Russian oil venture TNK-BP, bankers said on Wednesday.

Reuters - French oil group Total expects to get firm commitments for financing the $34 billion Ichthys liquefied natural gas (LNG) project in Australia within about two months, a company executive said on Wednesday.

E&Ps

(Late Tuesday) Press Release - Approach Resources Inc. announced that it intends, subject to market conditions, to offer 5,000,000 shares of its common stock in an underwritten public offering. The offering is being made pursuant to an effective shelf registration statement filed with the U.S. Securities and Exchange Commission.

RBC Capital initiated coverage on Magnum Hunter Resources with an ‘Outperform’ rating due to robust production growth, growing oil mix and significant leverage to 3 highly economic resource plays.

(Late Tuesday) Press Release - Newfield Exploration Company announced signing an agreement to sell its remaining assets in the Gulf of Mexico to W&T Offshore, Inc. Including today's agreement and dispositions closed in late 2011 and early 2012, total asset sales culminating in the Company's exit from the Gulf of Mexico generated approximately $300 million.

Press Release - PDC Energy, Inc. announced the Company is pursuing development of its Utica Shale position in southeast Ohio independently and is no longer actively seeking a joint venture partner to develop the play. The Company received various joint ownership and development proposals from interested potential JV partners in August and early September, 2012 and has determined that the proposals do not meet PDC's value expectations.

Reuters - Oil and natural gas producer Swift Energy Co lowered its full-year production forecast due to expected delays at its South Louisiana oil fields that were hit by Hurricane Isaac last month. Swift Energy now expects full-year production to be lower by 225,000 barrels of oil equivalent (boe) compared with its previous forecast. It had forecast 12.0 to 12.6 million boe (mmboe) of production for 2012.

CANADIAN E&Ps

TD Securities upgraded Parex Resources, Inc. to ‘Action Buy List’ from ‘Buy.’

Macquarie downgraded Penn West Exploration to ‘Underperform’ from ‘Market Perform.’

Fraser Mackenzie initiated Petrobakken Energy with a ‘Strong Buy’ stating the company has an attractive total return potential.

OIL SERVICES

Wells Fargo initiated Gulfmark Offshore, Inc. with a ‘Market Perform’ rating.

Wells Fargo initiated Tidewater Inc. with an ‘Outperform’ rating.

DRILLERS

Wells Fargo initiated coverage of RPC Inc. with a ‘Market Perform’ rating.

(Late Tuesday) Press Release - Transocean Ltd. issued a monthly fleet update summary which includes new contracts, significant changes to existing contracts, and changes in estimated planned out of service time of 15 or more days since August 15, 2012. Total backlog associated with new contracts or extensions since the August 15, 2012 fleet update summary is approximately $1.7 billion.

REFINERS

(Late Tuesday) Reuters - BP has been in talks to sell its 400,780 barrel per day (bpd) Texas City, Texas, refinery to Marathon Petroleum Corp, according to a report posted by the Financial Times on its website on Tuesday.

Reuters - Phillips 66 reported an equipment malfunction at its 146,000-barrel-per-day refinery joint venture in Borger, Texas, according to a notice filed with state pollution regulators.

MLPs

Reuters - Cheniere Energy is likely to start selling spot liquefied natural gas (LNG) from the Sabine Pass project in Louisiana as early as late 2015, its chief executive said on Tuesday, setting the stage to export 2 million tons per annum of U.S. supplies to global markets.

(Late Tuesday) Press Release - ONEOK Partners, L.P. announced that it is holding an open season for its previously announced Bakken Crude Express Pipeline. The open season process provides potential shippers the opportunity to execute long-term transportation contracts with ONEOK Partners in exchange for priority transportation service.