Crude oil prices could drop sharply lower as refined product storage sites come close to maximum capacity, further adding to a glut that has already seen crude prices fall by more than half since June 2014, Goldman Sachs said.

Although "tank tops" - a term referring to storage capacities hitting their maximum - were unlikely, Goldman said that inventories were already "too close for comfort", bearing the potential for a sharp fall in crude prices.

"Distillate storage utilization in the U.S. and Europe is nearing historically high levels, following near record refinery utilization, only modest demand growth (especially relative to gasoline), and increased imports from the East on refinery expansion and Chinese exports," Goldman Sachs said.

"This raises the spectre of 1998 (and) 2009 when distillate storage hit capacity, pushing runs and crude oil prices sharply lower," it added in its note to clients.