How quickly has the oil market has changed? Since November of last year, oil predictions have run the gamut from complete wipeout to $20 a barrel to temporary distress and a quick V-bottom recovery to $75. As pessimistic as I've been on the length of time that depressed prices in oil will remain, I've been equally skeptical both of big up and downslides from current prices. I cautioned that oil wouldn't see $60 a barrel as prices drove into the mid-$50's and I'm again warning that oil will never see the $25-30 dollar disaster price that many are predicting now.
But what will stop a slide that now seems inevitable? With oil stockpiles continuing to build steadily, and with predictions that virtually every drop of storage will be gone by May, what can possibly stop a slide into the 30's or even the 20's? There are a few truly unprecedented 'relief valves' for oil and while they are unlikely, it's time to consider their possibility – both a dispensation for crude export by the US Commerce Department or a proactive export of barrels by oil producers themselves, even without government approval.
What happens when storage actually does run out? This is a question that I have been asked repeatedly recently and since it is entirely without precedent, I'm not wholly sure. But I do have some ideas.
I imagine that many conversations are already taking place in Washington between oil's lobbyists and the Obama administration about a temporary halt to the US crude…