The drop, also fueled by a stronger dollar, comes after the crude benchmark closed out the third quarter with its biggest three-month gain in 1-1/2 years, buoyed by supply risks in the Middle East and efforts among global central banks to stimulate flagging economies.
But manufacturing data out of China that offered more evidence of a seventh straight quarter of slowing economic growth in the world's No. 2 oil user put demand prospects back in doubt. Japan's Tankan survey that pointed to a worsening mood among businessmen added to the sour tone.
"Investors are focusing on demand indicators being weaker than expected," said Natalie Rampono, a commodity strategist with ANZ in Melbourne.
China's weak manufacturing activity, Japan's Tankan survey and social unrest in debt-hit Spain "point to downside pressure in the near term" for oil prices, Rampono said.
Front month Brent futures fell 86 cents to $111.53 per barrel by 0328 GMT, while US crude futures dropped 91 cents to $91.28.
Brent gained 14.9 percent in the third quarter, following a steep 20 percent second-quarter drop, while US crude rose 8.5 percent in the quarter after slumping 17.5 percent in April-June.
After a choppy September, helped largely by a series of stimulus announcements by central banks in the United States and Japan as well as a bond-buying plan by the European Central Bank, investors have begun to worry that the measures may only increase liquidity in markets and not spur real demand.