Oil could drop below $20 a barrel as the search for a level that brings supply and demand back into balance makes prices even more volatile, Goldman Sachs Group Inc. predicted.

Capacity to store crude has been exhausted in some places, said Jeff Currie, Goldman’s head of commodities research. Prices may need to drop low enough to halt crude output that can no longer be stockpiled, he said.

“Once you breach storage capacity, prices have to spike below cash costs because you have to shut in production almost immediately,” Currie said in an interview with Bloomberg Television. Volatility will surge and he “wouldn’t be surprised if this market goes into the teens.”

West Texas Intermediate, the U.S. crude benchmark, traded near $30 a barrel on Tuesday, having slumped to a 12-year low near $26 on Jan. 20 as rising OPEC output and resilient U.S. shale production intensifies a global glut. Prices will swing between $20 and $40 a barrel over the next six to nine months as the re-balancing process plays out, Currie said.

Inventories at Cushing reached 64.2 million barrels in the week to Jan. 15, according to Energy Department data that extend back to 2004.

While swings in prices are set to escalate, the oil slump doesn’t seem likely to derail the global economy, Currie said.

“The difference today versus other cycles in the past is that we have many risk-sharing arrangements put in place,” Currie said. Flexible exchange rates in Russia to liquid markets for high-yield debt in the U.S. are all designed to make the financial system safer, he said.