Brent crude dips further away from $86 on strong dollar, China data

Brent crude inched down on Monday, moving further away from $86 a barrel as mixed Chinese data and a strong dollar pressured prices.

Although growth in China's vast factory sector rose to a three-month high in October as smaller firms saw more orders, the numbers still pointed to a sluggish economy that is losing momentum.

The US dollar touched seven-year peaks versus the yen on Monday, dragging on oil prices as it makes the commodity more expensive for buyers holding other currencies.

Brent crude for December delivery slipped one cent to $85.85 a barrel by 0244 GMT. The oil benchmark has fallen more than nine per cent in October. US crude fell 18 cents to $80.36 a barrel after losing 11 per cent last month.

"We are just seeing a little bit of a bounce in prices after some softness over the weekend. But the big driver that we are seeing is the strength of the US dollar. That is something that would weigh on the potential upside of the oil price," said Ben Le Brun at OptionsXpress.

The final HSBC/Markit Manufacturing Purchasing Managers' Index (PMI) edged up to 50.4 in October, up from the September's reading of 50.2, but unchanged from a preliminary reading.

While the headline number looked slightly better, growth rates slowed in several key areas heading into the fourth quarter, putting the government's full-year growth target of 7.5 per cent further in doubt.