Oil fell on this morning amidst post-holiday thin trade.

The January contract fell 35 cents to $83.51 a barrel at 06.56 GMT (1:36 am ET) as the US dollar strengthened, while ICE Brent dropped 62 cents to $85.48 a barrel, reports Reuters.

Investors are cautious, waiting to see the larger impact of the Irish debt and China’s moves to accelerating inflation after following a recent crackdown on commodity prices.

The dollar index .DXY hit a new two-month high on Friday, pulled up by worries over EU debt problems and North Korea’s fresh warning against a US-South Korean joint military exercises.

Oil prices are likely to stay range bound between the low to mid-$80s as the market keeps a close tab on the macro-economic situation.

The euro hovered near a two-month low against the dollar on concerns about the wider debt crisis in Europe.