Crude oil prices struggled to remain above $60 a barrel with West Texas Intermediate tanking 4.3% to $61.07 a barrel after a large increase in oil imports contributed to oversupply in domestic crude oil inventories for the week, according to the Energy Information Administration. Earlier Wednesday, OPEC warned that demand for oil in 2015 would hit 28.9 million barrels a day, its lowest point in 12 years.
The energy sector was dragging on benchmark indices with the Dow Jones Industrial Average down 1.4%, or 255 points, and the S&P 500 falling 1.5%, the benchmark indices' worst drop since Oct. 9. The Nasdaq slid 1.6%. The Volatility Index (VIX.X) spiked 22.3%.
"Historically at least, energy stocks have tended to lead the market," Kingsview Asset Management's Paul Nolte told CNBC. "We're now six months into oil underperforming the overall market, so we may be in for some rough sledding."
Small-cap Goodrich Petroleum (GDP) and Oasis Petroleum (OAS) slid after separately announcing plans to cut 2015 capital expenditures in half. Oil companies have been reassessing future projects in light of tumbling oil prices. Earlier in the week, ConocoPhillips (COP) announced it was cutting its 2015 capex budget by 20%.