The US has 40 million barrels more in storage than this time last year, and more than 30 million barrels more than the five-year average, according to Department of Energy figures.
The largest inland storage depot in Cushing, Oklahoma, has a reported 327 million barrels in its tank farms.
Iran and other Middle East producers are currently storing oil aboard super tankers until prices increase. With storage space being tight in the US, speculators are chartering Very Large Crude Carriers (VLCCs) as floating storage tanks.
The U.S. Energy Information Administration (EIA) has predicted that US consumption will drop by 1% this year, to 20.6 million barrels of oil a day. Typically demand has risen by 1-2% per year.
At current low prices, oil producers would like to be able to cut back on production until high prices return. The Organization of Petroleum Exporting Countries (OPEC) has done its best to control supplies by calling for reduction in production.
A lack of storage at the Nymex contracts delivery point has continued to push prices lower in the US even as the oil market stabilises overseas.
Light, sweet crude for February delivery traded $1.15 (0.87), or 3.1%, lower at $36.13 a barrel on the New York Mercantile Exchange.
Brent crude on the ICE futures exchange traded $0.90 higher at $45.98 a barrel on 15 January.
Storage terminals are approaching full capacity in the US, particularly at Cushing, the Nymex contract's delivery point.
As there is no space to situate the oil the value of the February futures contract is falling, exceeding the decline in outer-month futures and moving in the opposite direction as international benchmarks.
February crude now trades at a $7.83 discount to March, and nearly a $10 discount to Brent. February crude expires on 22 January.
The market appears to expect the cycle to be broken in April or May, as the spreads between Nymex contracts approach less-excessive levels around then.
The contraction mirrors the opinion that reduced production by the Organization of Petroleum Exporting Countries (OPEC) will eventually result in inventory draw-downs in Q2.