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Despite a grim demand outlook for energy as the coronavirus pandemic continues to weigh down the global economy, Goldman Sachs remains bullish on both oil and gas prices — regardless of the U.S. presidential election outcome in November.

“We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst,” the bank’s commodities team wrote in a research note Sunday.

Goldman sees improved demand in 2021 and tighter supply for both gas and shale oil superseding election results, though a Biden administration could provide a further boost to oil prices by making production — especially for shale — more expensive and more regulated.

If elected, Biden seeks to achieve a carbon pollution-free energy sector by 2035, and analysts expect his administration to impose regulations that would increase shale production costs with things like taxes and methane restrictions, which the Donald Trump administration had eased. Goldman estimates such taxes could increase costs by as much as $5 per barrel. And expected dollar weakness under Biden also provides upside risk to prices.

While Biden has said that fracking would not be “on the chopping block,” a Democratic administration could also move to reduce the scope for shale exploration with restrictions on federal land drilling and approvals for pipelines. The former vice president is currently leading incumbent Trump by double digits in major national polls.

If Trump is re-elected, while pro-oil and gas policies would remain in place, “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate capex re-allocation away from fossil fuels.”

Goldman’s bullish demand outlook takes into account a potential $2 trillion stimulus under Biden with more renewable energy investment along with an infrastructure push, which it forecasts could boost U.S. demand by around 200,000 barrels per day.

The bank’s outlook is optimistic compared to several other forecasts; the International Energy Agency in September cut its forecast for 2020 oil demand growth to 91.7 million barrels per day, a contraction of 8.4 million bpd year-on-year. The agency citing a “treacherous” path ahead amid weakening market sentiment and an upsurge in the number of coronavirus cases globally.

Reference: CNBC