By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) -- Energy stocks outpaced the broad market as U.S. equities raced into the red Wednesday, reeling on growing fears of a double-dip recession and rising supplies.
Adding to the gloom, the International Energy Agency said its forecast for world oil consumption faces a "significant downside risk" because of concerns about the global economic recovery in the coming months.
Losses in the energy sector mounted after the latest weekly supply data. Oil supplies fell 3 million barrels - greater than the forecast of 2.4 million barrels, according to a survey by Platts. However, gasoline stockpiles increased by 400,000 barrels verses the forecast for a drop of 1.5 million barrels - a bearish result.
Energy components within the S&P 500 (SPX 1,093, -28.03, -2.50%) collectively fell 3.8%, the bottom among the benchmark's 10 sub-sectors.
The NYSE Arca Oil Index (XOI 983.03, -35.04, -3.44%) fell 3.5% to 982, dipping below the 1,000-point mark after only six sessions above it. The NYSE Arca Natural Gas Index (XNG 511.56, -18.35, -3.46%) dropped 3.5% to 511, while the Philadelphia Oil Service Index (OSX 177.67, -7.73, -4.17%) surrendered 4.5% to 177.
The Dow Jones Industrial Average sank nearly 2% at its intraday low, as energy-sector blue chips Exxon Mobil (XOM 60.48, -1.45, -2.34%) and Chevron (CVX 77.48, -1.57, -1.98%) fell 1.8% and 2.2% respectively.
In energy trading, the direction also pointed lower. Crude-oil futures sank well below the $79-a-barrel mark.
On the weather front in the oil-rich Gulf of Mexico, the National Weather Service issued a tropical storm warning along the coast from Florida to Louisiana for a system currently known as Tropical Depression Five, expected to hit land after midnight on Friday.
The storm's maximum sustained winds are blowing at 30 miles per hour. Rain accumulations of three to five inches with isolated maximum amounts of eight inches are possible.
Among stocks in the spotlight, Noble Energy Inc. (NBL 66.97, -2.03, -2.94%) said it received government approval to develop its 2009 Tamar gas discovery in the Mediterranean off the coast of Israel. Noble plans to build a 70-mile pipeline as part of the deal, with an expected completion of 2013.
Shares of Noble Energy fell 3% to $66.90.
Regency Energy Partners LP (RGNC 23.62, -1.14, -4.60%) said it priced 15.25 million common units representing limited-partner interests at $23.80 each, for gross proceeds of $363 million.
Regency, which plans to use the money raised to pay down debt, dropped 4.6% to $23.63.
Also Wednesday, Kaufman Bros. revised its 12-month price target for shares of SunPower Corp. (SPWRA 12.80, -0.13, -0.10%) to $13, up from $11 previously, on the heels of second-quarter financial results reported by the maker of solar modules.
"SunPower benefited from strong demand and was sold out in the second quarter," analyst Jeffrey Bencik said in a note to clients. "We expect this demand trend to continue."
He reiterated a hold rating but upped his earnings estimate for 2010 to 37 cents a share, from 9 cents a share previously.
Shares of SunPower, which reported results late Tuesday, fell 1.2% to $12.77.
