Notwithstanding the Cushing build, analysts polled by Reuters forecast that crude stocks across the United States probably fell last week by 500,000 barrels.

As dialogue breaks down between OPEC’s largest oil producer (Saudi Arabia) and potentially OPEC’s largest swing producer (Iran – it could increase production by 0.5mboed, albeit at a slow pace), oversupply will likely continue, if not get worse, in our view.

Crude oil for delivery in February on the New York Mercantile Exchange inched up 30 cents, or 0.8%, to trade at $37.34 a barrel during European morning hours.

The US Department of Energy’s weekly report Wednesday showed a sharp drop in US commercial crude inventories, by 5.1 million barrels to 482.3 million barrels in the week ending January 1.

The American benchmark, West Texas Intermediate, is down by around 1.5%, at $35.45.

Iran’s oil exports have fallen to around 1 million barrels per day, down from a peak pre-sanctions peak of nearly 3 million barrels per day in 2011.

Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries, while Iran is also a key member, and there are concerns that their diplomatic spat could lead to a disruption in oil supplies. North Sea Brent crude for February was trading 91 cents, or 2.44 percent, higher at $38.19.

“If the official US data comes in anywhere near expectations, it will add to the perception that the supply response is not adequate enough to stabilize prices”, Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone.

All of that is good for U.S. consumers, he said, noting that the U.S. Energy Information Administration says the average U.S. household saved almost $700 on cheaper gasoline previous year, compared with 2014. Something that, along with the growing instability of OPEC, is only going to serve to drive the price of oil down to even deeper depths.

“There are rising stockpiles and the tension between Iran and Saudi Arabia makes any deal on production unlikely”, said Michael Hewson, chief market analyst at CMC Markets.

Crude excess on the back of low demand from China forced crude oil prices to touch their 11-year lows last month.

Here’s a breakdown of what’s pulling the WTI crude oil price today lower… Saudi production reached a record high of 10.56 million bpd in June.

Crude oil is expected to succumb to pressures from Iranian production this year.