Oil price swings weighed on stocks and exchange-traded funds again on Tuesday, hitting the shares of energy producers for the fifth consecutive trading day.
Oil futures flipped back and forth between positive and negative during U.S. morning trading, whipsawing the markets.
Oil producers' shares have slid for a week as crude prices hit fresh lows on fears the world is running out of storage capacity and a global supply glut intensifies. Initially down as much as 3.3 percent, the S&P 500 oil sector was down 1.2 percent around midday.
Kinder Morgan lost 4.8 percent, while Exxon Mobil (XOM) fell 1.9 percent, Chevron Corp was down 0.4 percent and Schlumberger Ltd fell 1.2 percent.
The sell-off came as Wall Street estimates called for sharp declines in energy companies' 2014 earnings amid mounting credit stress and the slump in crude prices.
The SIG Oil Exploration and Production index hit its lowest level since March 2009, while the Market Vectors Oil Services ETF hit its lowest point since October.
The Energy Select Sector SPDR Fund shows a year-to-date loss of 22 percent, making it the worst-performing S&P 500 sector fund.
There were some notable exceptions. Williams Companies Inc , a specialist in natural gas infrastructure, rose 3.2 percent. The ALPS Alerian MLP ETF - which includes companies that pipe, store and process oil - added 2.4 percent.
Despite benefiting from lower oil prices, airlines moved sharply lower as Southwest Airlines estimated its fourth-quarter operating revenue per available seat mile to be roughly flat to down 1 percent. Southwest's stock dropped 7.8 percent.
Other airline shares tracked by the S&P Composite 1500 Airlines Index also moved down by 4 percent, halting the December rally fueled by falling oil prices.
Options traders have responded to the turmoil in the energy sector's stocks by taking to the options on the sector ETF and individual shares.
Open interest in the Energy Select Sector SPDR Fund's options has jumped to 1.2 million contracts, up 40 percent over the last one month.
Puts, typically used to bet on declines in the fund's shares, outnumber calls, used for placing bullish bets, by a 1.8-to-1 margin, the highest since early October, according to options analytics firm Trade Alert data.
(Reporting by Trevor Hunnicutt, Terence Gabriel, Sinead Carew, Lewis Krauskopf and Saqib Ahmed)