Brent Slips Below $114 as China Flash PMI Retreats

Brent oil fell below $114 a barrel on Monday, reversing some of the gains made in the previous session on worries about China's demand growth as manufacturing activity in the world's second biggest oil consumer pulled back from two-year highs.

The HSBC flash purchasing managers' index (PMI) for February slipped to 50.4, down from the previous month's best reading since January 2011, weighing on Asian shares and base metals. But further losses in oil were stemmed as investors waited to see if Italy's elections would produce a stable government.

Front-month Brent slipped 11 cents to $113.99 a barrel on Monday morning, after settling 0.5 percent higher on Friday. U.S. oil declined 2 cents to $93.11, after ending up 29 cents in the previous session.

"The reason for the decline this morning is the China PMI numbers, but prices have not lost much ground," said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo.

"Oil will trade in a tight range today till Italy's election results are out. Investors want to get a sense how things will unfold in Europe."

Italians finish voting on Monday in one of the most closely watched and unpredictable elections in years, with rising concern that the ballot may not produce a government strong enough to pull Italy from its economic slump.

For the euro zone, the stakes are high. Italy is the third largest economy in the 17-member bloc and the prospect of political stalemate could reawaken the threat of dangerous market instability.

Hasegawa expects Brent to trade within a tight range of $113 and $115 a barrel over the next 24 hours.

Brent is expected to hover above a support at $113.59 for one more session before breaking this level and falling to $111.97, while U.S. oil may rebound to $94.17, according to Reuters technical analyst Wang Tao.