The data comes at a crucial moment for the Republican Party, which according to the latest public opinion polls with just four weeks to the midterm elections when the whole House of Representatives and a third of the Senate seats are at stake, the party figures loosing to the Democrats.

Both expenditure and revenue marked new maximums in the fiscal year ended September 30: revenue increased 11.7% and outlays 7.3%.

The deficit is also far lower that the originally announced by the federal government last February and lower that the estimate of last July. Fiscal 2006 is also the best year since fiscal 2002 when the accumulated deficit reached 159 billion US dollars after four years running of surpluses, a legacy of the Bill Clinton administration.

Since then the US has recorded the three largest deficits in its history including the 413 billion US dollars of fiscal 2004, the highest ever.

However Republican President George Bush argues that the massive tax cuts decided by his administration have helped to cut public debt, stimulate the economy and as a consequence increase fiscal revenue.

November Brent crude on the ICE Futures exchange fell 24 cents to $58.41 a barrel.

Since July, the cost of crude oil has dropped by more than 25 percent amid rising global inventories, concerns about slowing economic growth and a milder-than-anticipated hurricane season. Adding to downward pressure, the International Energy Agency once again lowered this year's global demand forecast in a report issued Wednesday.

Vienna's PVM Oil Associates suggested that more downward revisions to demand could be forthcoming.

"Since the beginning of the year, the agency has been continuously correcting its demand growth expectation for 2006," it said, in a research note. "The total (downward) correction now already sums up to a differential of 810,000" barrels per day.

Against this backdrop, the president of the Organization of Petroleum Exporting Countries, Nigerian oil minister Edmund Daukoru, said Wednesday that a new OPEC cut has been agreed to and that members were "nearing consensus" on how to apportion the cuts.

But Saudi Arabia, the country whose participation is necessary to make any significant output reduction, has not publicly confirmed this.

The last time OPEC trimmed its output - by 1 million barrels a day - was December 2004, when oil traded slightly above $40 a barrel. That caused an immediate spike in prices.

Market participants awaited a weekly fuel inventories report to be released Thursday by the U.S. Energy Department, expected to show gains in domestic crude oil and distillate stocks.

Crude oil inventories are expected to gain by about 500,000 barrels, while stocks of distillates, which include heating oil, are forecast to gain by about 400,000 barrels a day, according to a Dow Jones Newswires survey of analysts.

Gasoline inventories are seen falling by about 600,000 barrels, according to the analysts' average.

In Nymex trading Thursday, heating oil futures were down 0.28 cent at $1.6692 a gallon while gasoline prices edged 0.43 cent lower to $1.4460 a gallon. Natural gas prices fell 30 cents to $6.120 per 1,000 cubic feet.