Following a government report of more than sufficient surplus, crude oil prices came tumbling down on Thursday as the US petroleum inventory reached 1.14 billion barrels as of last week according to the US Energy Department.

With the prospect of a virtual free-flowing of oil and fuels remaining for some time, heating oil and diesel supplies plunged, which drove the market up to a level last seen three weeks ago as Citi Futures Perspective analyst Tim Evans observed that "the headline numbers were supportive, so I understand why prices rallied immediately, but they masked a build in total inventories."

That big surplus led a to a decline of US 41 cents or 0.6 percent for the October delivery of crude oil, which settled at $US74.26 on the New York Mercantile Exchange while in London's ICE Futures Europe exchange, Brent crude oil for October dipped by 80 cents or one percent to $US77.37 per barrel.

The same energy department report showed that crude oil supplies dwindled from 1.85 million barrels to 359.9 million as of September 3 though stocks were about 12 percent higher as compared to the five-year average in the US inventory standard.

Analysts are predicting that the present level of inventories was poised to climb by as much as one million barrels as shown in a survey published by Bloomberg News.

Also, distillate fuel stocks dropped from 388,000 barrels to 175 million that rendered supplies reaching above average levels as of August 20 as the same Bloomberg survey showed that inventories would pile up to 700,000 barrels.