Oil falls on Tuesday morning as concerns of the state of the global economy outweighs the Saudi decision to instate the largest production cut in years.

A barrel of European reference crude Brent goes for USD 76.47 on Tuesday morning, down from USD 77.20 on Monday afternoon. Simultaneously, US West Texas Intermediate trades at USD 71.38, down from USD 72.65.

Oil slips after having gained on Monday following the Saudi decision to cut production output by 1 million barrels per day in July.

The voluntary reduced oil output is part of a wider agreement between the Organization of Petroleum Exporting Countries and its allies, OPEC+, including Russia, about curbing oil production towards 2024.

”Supply concerns were at the center following the OPEC output cuts. Gains were limited amid continued concern on economic backdrop,” writes ANZ analysts in a note, according to Reuters.

Market participants now await whether the US Federal Reserve aims to hike interest rates in June. Higher interest rates could curb energy demand.

Similarly, market is waiting to see what comes out of Chinese May trade data on Wednesday and what it will indicate about demand.