* U.S. crude inventories at record highs at Cushing hub
* U.S. crude futures' contango widens
* Traders rush to buy $25 puts for U.S. crude
* Goldman sees U.S. crude at $20-$40 until second half of 2016
* Iran offers crude to Asia at discount to Saudi Arabia (New throughout; adds latest prices, scramble to buy bearish U.S. crude options)
By Barani Krishnan
NEW YORK, Feb 11 (Reuters) - U.S. oil prices fell for a six straight day on Thursday, approaching 12-year lows hit last month, weighed by brimming crude inventories and a Goldman Sachs (N:GS) forecast that prices would remain low and volatile until the second half of the year.
Market intelligence firm Genscape reported the Cushing, Oklahoma delivery hub for U.S, crude futures saw a build of almost 425,000 barrels in the week to Feb. 9.
Crude inventories in Cushing hit all-time highs just shy of 65 million barrels during the week ended Feb. 5, government data showed on Wednesday. crude CLc1 was down 60 cents, or 2 percent, at $26.85 per barrel by 12:23 p.m. EST (1723 GMT). Earlier, it fell to within 3 cents of the $26.19 intraday low hit in January, then its weakest price since 2003.
Traders scrambled to buy bearish U.S. crude options, particularly for $25 puts, on the back of the continuous price slide. Technical analysts said the $25 level could be hit in a matter of days. spread between the first two months in U.S. crude CL-1=R widened nearly 60 cents to as much as $2.80. That was the largest discount, or "contango," between the two contracts since November, indicating tight storage space was limiting interest to buy prompt barrels to store and sell at a later date.
"If storage becomes any scarcer, producers will have no choice but to sell it (the front-month) even lower," said Pete Donovan, broker at New York's Liquidity Energy.
Brent LCOc1 was down 55 cents, or 1.8 percent, at $30.29 per barrel.
Investment bank Goldman Sachs said in a note to its clients it expected oil prices to fluctuate between $20 and $40, with significant volatility and no trend until the second half.
Oil has fallen almost 75 percent since mid-2014 as competing producers pumped 1-2 million barrels of crude daily exceeding demand, just as China's economy hit lowest growth in a generation. gained briefly after a report cited by sources that some OPEC countries were trying to achieve a consensus among the group and key non-members for an oil production "freeze". that, fighting among OPEC members for market share appeared to heighten as Iran offered its crude to Asia at a discount to rival OPEC producer Saudi Arabia. a price fight within OPEC for Asian market share, and there are worries that storage capacity is going to be breached," said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.