Energy stocks were lower Wednesday afternoon, with the NYSE Energy Sector Index decreasing 1% and the Energy Select Sector SPDR Fund (XLE) down 0.6%.

The Philadelphia Oil Service Sector index dropped 2.5%, and the Dow Jones US Utilities index fell 1.1%.

US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended Jan. 3 following a decrease of 900,000 barrels in the previous week. Excluding inventories in the SPR, commercial crude oil stocks fell by 1 million barrels after a 1.2-million-barrel decline in the previous week, compared with the 2 million barrel decrease expected in a survey compiled by Bloomberg.

Front-month West Texas Intermediate crude oil was declining 1.2% to $73.33b a barrel while the global benchmark Brent crude contract was dropping 1.1% to $76.17 a barrel.

US natural gas stocks fell by 40 billion cubic feet in the week ended Jan. 3, as expected in a survey compiled by Bloomberg and following a decrease of 116 billion cubic feet in the previous week.

Henry Hub natural gas futures jumped 6.3% to $3.67 per 1 million BTU.

In corporate news, Constellation Energy (CEG) is in talks to buy Calpine in a deal that would value the energy company at $30 billion, including debt, Bloomberg reported. Constellation shares were falling 4%.

Shell (SHEL) shares were down 2.7% after the company said it expects weaker Q4 oil and gas trading results compared with the prior quarter due to lower liquefied natural gas production and lower trading performance.

W&T Offshore (WTI) shares rose 2.2% after it said Wednesday it's set to receive a $58.5 million cash insurance settlement in January for a casualty loss event at its Mobile Bay 78-1 well in the Gulf of Mexico in 2023.