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Oil tumbled below $40 a barrel for the first time in a month, with a sell-off in equities and a stronger dollar exacerbating demand concerns as a lackluster summer driving season draws to a close.

Futures in New York declined as much as 3.9% on Sept. 4, leaving prices on track for the worst week since June. Stocks in the U.S., Europe and Asia were weaker, with the S&P 500 Index falling as much as 3.1%. The dollar also strengthened, decreasing the appeal for commodities denominated in the currency.

“People may be starting to think that the market has maybe gone a little too far, gotten ahead of the economy, and they’re selling off more broadly,” said Michael Lynch, president of Strategic Energy & Economic Research. “The sell-off in equities reflects a bit more pessimism about the economy.”

Crude is off to a weak start in September as COVID-19 flare-ups in various parts of the world threaten a sustained rebound in oil consumption at a time when the Organization of Petroleum Exporting Countries and its allies are returning oil to the market. Russia’s energy minister said demand has returned to 90% of pre-COVID levels, but limited travel and work-from-home arrangements are slowing down the recovery.

Meanwhile, the upcoming Labor Day holiday weekend will mark an end to the unusually dull summer driving months this year, with the customary drop-off in demand even more worrisome as the pandemic leaves companies deprived of the season’s typical boost in profits.

“This has been the summer driving season that wasn’t,” said John Kilduff, a partner at Again Capital. “In the good old days, this would have been the last hoorah for the summer driving season,” but “the demand situation just continues to haunt this market.”

The diesel market is also weighing on the overall demand outlook. The fuel’s premium to Brent, a key metric used to gauge the market’s strength, plunged to the lowest in at least nine years due to stuttering consumption and a glut of supply. Diesel, used to power heavy industry such as agriculture and mining, as well as cars and trucks, is an important marker of economic health.

Physical markets are showing a mixed picture. Mars Blend, a high-sulfur crude, is trading at its highest premium to WTI futures in nearly two weeks. Meanwhile, Bakken crude for delivery at Clearbrook, Minn., fell this week to its largest discount to Nymex oil futures since early August, before recovering slightly in recent sessions.

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