SINGAPORE: Oil prices slipped more than 1 percent on Monday as investors adopted caution ahead of a US Federal Reserve policy meeting and China鈥檚 manufacturing data due this week, offsetting support from tension in the Middle East, according to Reuters.

Brent crude futures dropped 1 percent, or 97 cents, to $89.51 a barrel by 9:18 a.m. Saudi time, while US West Texas Intermediate crude was down 1.3 percent, or $1.13, at $84.41 a barrel.

鈥淒espite an escalation in the Hamas-Israel war, the ground invasion was widely expected,鈥� said CMC Markets analyst Tina Teng.

鈥淭he weekend playout signals no further expansion into a wider regional war, which caused a retreat in oil prices.鈥�

Both Brent and WTI had ended Friday up 3 percent after Israel stepped up ground incursions into Gaza, stoking worries that the conflict could widen in a region that accounts for a third of global oil production.

Investors are watching for the outcome of Wednesday鈥檚 US Fed meeting, jobs data and earnings from tech giant Apple Inc. for signs of any economic slowdown that could affect fuel demand in the world鈥檚 top oil consumer.

The Fed is widely expected to keep interest rates unchanged, however, while the central banks of Britain and Japan are also set to review their policies.

China will report its October manufacturing and services PMIs this week, with investors looking out for more signs that the economy of the world鈥檚 top crude importer is stabilising and fuel demand is improving after supportive measures by Beijing.

As developments in the Middle East keep investors on edge and prices volatile, Brent and WTI fell on the week last week, for the first time in three weeks.

鈥淏ut the weekend showed the armed conflict remains limited to Israel and Gaza,鈥� said Vandana Hari, founder of oil market analysis provider Vanda Insights. 鈥淚n that light, crude looks overbought. I expect it to continue sliding.鈥�