Most anything is safe if done properly. The way I've done welding on gas and diesel tanks is to have the tank steamed out and then checked with a sniffer for flammable gas.
Even then, if you're like me when you first strike the arc you're waiting for the big bang. What I usually do for a bit of extra insurance is to flood the inside of the tank with a C02 extinguisher, this will displace the oxygen. I've also heard of people using dry ice (C02), put a piece of it inside the tank for awhile and it will also dissipate the oxygen.
You said a used oil tank, granted oil is not as flammable as gas but who says noone didn't dump a little in there, plan for the worst case, my opinions only, take them for what they're worth....Mike