June 6 Reuters Oil prices edged lower early on Tuesday, coming off gains made the previous day as concerns about the global economic backdrop outweighed supply worries raised when Saudi Arabia announced its biggest output cut in years.

Brent crude futures slipped 51 cents to 76.20 a barrel by 0506 GMT. The U.S. West Texas Intermediate crude fell 54 cents to 71.61 a barrel.

Brent had gained as much as 2.60 on Monday and U.S. crude as much as 3.30 after Saudi Arabia, the world39;s top exporter, said at the weekend its output would drop by 1 million barrels per day bpd to 9 million bpd in July. The benchmarks pulled back, though, to more modest gains by the end of the day.

Oil prices are still in a bear market, and we can see that some advanced economies have already started to fall into recession such as Germany, CMC Markets analyst Leon Li said.

Market participants are waiting to see if the U.S. Federal Reserve will hike or hold interest rates in June, and what China39;s May trade data on Wednesday will indicate about demand in the world39;s secondlargest oil consumer.

Higher interest rates from the Fed could curb energy demand, although several analysts say consumption will be strong. Markets now peg the chances of the Fed pausing its interest rate hikes this month at 77, according to the CME FedWatch Tool.

Demand is still expected to be a positive market driver after the release of recent economic data, with the U.S. not in a recession and Europe doing fine, said…