Oil slipped today as China's economic outlook remained weak even as manufacturing data improved, with the continuing trade war with the US weighing on demand growth for the world's largest crude importer. 

Brent crude futures were down $1.02, or 1.7%, at $60.89 a barrel this afternoon, while US West Texas Intermediate (WTI) crude futures fell by 75 cents, or 1.3%, to $55.16. 

China's official Purchasing Managers' Index (PMI) rose to 49.8 in September, slightly better than expected and advancing from 49.5 in August. 

However, it remained below the 50-point mark that separates expansion from contraction on a monthly basis, data from the National Bureau of Statistics showed.  

China warned today of instability in international markets from any "decoupling" of China and the US, after sources said that US Presideent Donald Trump's administration was considering delisting Chinese companies from US stock exchanges. 

Meanwhile, top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day after an attack on its processing facilities this month, sources told Reuters last week.

However Saudi Aramco has yet to confirm its operations have been restored fully.

While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, it remains unclear how much of its output has actually been restored. 

Saudi Arabia's Crown Prince Mohammed bin Salman warned in an interview broadcast yesterday that oil prices could spike to "unimaginably high numbers" if the world does not come together to deter Iran, but said he would prefer a political solution to a military one.

"The remarks help to alleviate immediate concerns around escalations in the Middle East, leaving the market to revert its focus to the economy," BNP Paribas global oil strategist Harry Tchilinguirian told the Reuters Global Oil Forum, noting the risk posed by the US-China trade dispute.