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By Bloomberg

Oil and gas producers dropped to their lowest level in almost four years as collapsing markets in China heightened concern that demand will falter, aggravating a glut.

The index of 40 energy explorers, refiners and drillers on the Standard & Poor’s 500 lost $17 billion in value, sinking 5.2 percent Monday in New York to the lowest since October 2011. The slide extended Exxon Mobil Corp.’s year-to-date decline to 26 percent, putting the world’s biggest oil producer by market value on track for the poorest annual performance since at least 1981.

Stocks around the world plunged as a rout that began with the Aug. 11 devaluation of China’s yuan rippled through European and U.S. markets. Commodities fell to a 16-year low, Treasury yields dipped and U.S. crude closed below $40 a barrel for the first time since February 2009.

“It’s a bloodbath,” said Mark Hanson, an analyst who follows U.S. crude explorers at Morningstar Inc. in Chicago. “We’re at an intersection of a lot of bad news.”

Market Turbulence

Some of the biggest losers in the Standard & Poor’s 500 Energy Index included oil-services provider Baker Hughes Inc. and shale giant EOG Resources Inc., both with losses above 7.4 percent. Crude futures for October delivery declined 5.5 percent to $38.24 a barrel in New York after dipping to $37.75.

Deal activity among energy-focused investment bankers and project financiers screeched to a halt as potential investors eyed the market turbulence and sat on the sidelines, said Christopher Geier, partner-in-charge at Sikich Investment Banking in Chicago.

“The guys who are looking to invest money get really nervous when they see the markets turn like this,” Geier said. “Sitting on cash and doing nothing seems to make them feel better.”