By Steve Gelsi

Energy stocks fell Wednesday as oil prices retreated on rising inventories and earnings updates from ConocoPhillips (COP) and Hess Corp. (HES) failed to inspire any gains.

The American Petroleum Institute said crude supplies rose by 4.1 million barrels last week. Fresh weekly data from the U.S. Energy Information Administration are due out later this morning.

Crude futures fell $1.63 to $65.60 in the wake of a big move downward by equities in China.

The NYSE Arca Oil Index (XOI) fell 0.9% to 954. The NYSE Arca Natural Gas Index (XNG) dropped 2% to 435. The Philadelphia Oil Service Index (OSX) dropped 3% to 165.

ConocoPhillips fell 2.4% to $43.36 after its earnings fell by about $4 billion, but it still managed to earn more than $1 billion despite a loss in its refining operations.

Hess Corp. (HES) fell 7 cents to $53.50 after it said its second-quarter profit fell by $800 million.

National Oilwell Varco Inc. (NOV) fell 4% to $35.08 after it drew a downgrade to neutral from buy at Pritchard Capital Partners on Wednesday. Analysts cut their price target to $35 a share from $40 a share.

"Although National Oilwell Varco reiterated its anticipated orders from Brazil would come by year end, we believe sentiment may work against the stock near-term given potential further delays in the Petroleo Brasileiro SA process," Pritchard analysts said.

"We believe there is a greater risk to earnings in 2010 and 2011 due to the reduced order flow as well as other industry pressures that have materialized with greater severity than the company had anticipated earlier in the year."

Tidewater Inc. (TDW) retreated 4.7% to $45.50 after it said first-quarter net income fell by about half to $44.5 million, or 86 cents a share, from $84.8 million, or $1.64 a share in the year-ago period. Revenue fell to $326.6 million from $340 million.

The New Orleans shipping company for the energy business booked a non-cash charge of 93 cents a share related to its Venezuelan operations, where 11 of its vessels were seized as part of a program by the government. Wall Street analysts expected earnings of $1.79 a share and revenue of $330.4 million, according to a survey by FactSet Research.

-By Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com