Updated from Feb. 27.

Crude oil futures were lower Wednesday morning, trading at $60.88 after dropping more than $1 from Tuesday's close in electronic trading.

In an extremely volatile trading day, crude futures fell early Tuesday, rebounded around midsession, and then plunged after normal trading ended.

At 4 p.m. EST, the March contract for light, sweet crude oil was down 92 cents to under $61 a barrel after closing the floor session at $61.46. Heating oil climbed 2 cents to close at $1.78 a gallon, and gasoline ended the Nymex session up 3 cents at $1.81 a gallon.

Natural gas, which finished 2 cents lower at $7.53 per million British thermal units Tuesday, traded at a recent $7.38.

The overnight collapse in Chinese equities swept through global markets early Tuesday. The Shanghai Composite Index fell by 8.8% amid rumors that the Chinese government was preparing to put the screws to an overheating economy. Macroeconomic concerns reverberated around the world, and in the U.S. the Dow Jones Industrial Average was down more than 400 points.

"Equity prices in China have tripled in the last 18 months. Meanwhile, China has increased its benchmark lending rate multiple times. ... After the lunar new year, this confluence of factors is weighing on investors' expectations of the future," said Dennis Gartman, publisher of The Gartman Letter, an economic report.

Energy prices were snagged early on by the global bear run. However, they later reversed direction and moved upward as investors began to anticipate that the Energy Information Administration will release bullish crude oil inventory figures on Wednesday, according to Ed Meir, an energy analyst at Man Financial.

Following normal trading, crude futures changed direction again.

Hawkish comments from Iranian President Mahmoud Ahmadinejad over the weekend concerning his country's nuclear ambitions propelled crude oil to its highest close of the year on Monday.

News agencies reported that Ahmadinejad was criticized at home for lacking diplomatic sophistication. The reaction against his comments also dragged down crude oil prices. Some traders are re-evaluating the likelihood that elevated tensions between Iran and the West will spark a crude oil supply shock.

Oil prices have risen by roughly 20% since the end of 2006. Worries over Iran's nuclear ambitions have been a key catalyst for the jump in prices. However, many analysts say that the U.S. and other Western countries ultimately aren't willing to risk the consequences that a cut in Iranian oil supplies would bring.

Meanwhile, U.S. energy equities were weak Tuesday. BP ( BP - Get Report) closed down 3.2% to $61.87. Chevron ( CVX - Get Report) fell 4% to $68.58, and Exxon Mobil ( XOM - Get Report) slid 4.7% to $71.83. Electricity utility Exelon ( EXC) reduced power output at its Peach Bottom Atomic Power Station in Pennsylvania after it reported a small fire in an electrical transformer cabinet. Exelon's stock was down 4.7% to $66.47.

Oil and gas drilling firm Patterson-UTI Energy ( PTEN) was downgraded by Credit Suisse from neutral to underperform and its price target was reduced from $31 to $22. Shares were 4.8% lower at $22.87.

Elsewhere, Teekay Offshore ( TOO - Get Report) and Teekay LNG Partners ( TGP - Get Report) dropped after being downgraded by AG Edwards from buy to hold. Both are units of Teekay Shipping ( TK - Get Report).