As Covid-19 cases go up, the oil prices cool down. Brent is again sputtering, losing some of this month’s hard-earned gains, a telltale sign that it’s break over $40 isn’t sustainable on the prospect of more lockdowns and mobility restrictions in key markets, from the US to Brazil.

Another negative harbinger for oil also came out of the US after Chesapeake Energy filed for bankruptcy on Sunday. The bankruptcy doesn’t come as a surprise, as the Oklahoma-based shale player has been hinting at this fate since May. It is also important that the company filed for Chapter 11 bankruptcy – i.e. the fracker is looking to reorganize its debt, and not necessarily call it quits forever.

OPEC+ supply cuts have been helping keep the oil price afloat, and after the stellar nearly 90% compliance in May, in the next few days we will be getting data clues on June compliance. We will in particular be watching how much Iraq and other sub-compliers are improving. Another supply point to watch is the re-emergence of Libyan oil on the market, with the latest being reports that the Messala field could start up in the near-term.

More oil from Libya could bring back supply that the market had in a way forgotten, putting pressure on prices. Add the latest high Covid-19 infection rates in the US, Brazil and the renewed outbreaks in Asia and you have the perfect cocktail to bring the traders’ worst fears back to the table. The risk is plenty in today’s market and how Covid-19 evolves will very much determine the future of prices this year.