As far as I know the oil CAN'T go up and down like that, Is it possible to check the oil flow through the engine? it does sound like you have a blockage in one of your oil ways, try an engine flush oil (motorcycle) treatment, will mean you have to dump your present oil once you have done it but might save you from a blown engine, that's the best I can figure from the info you have supplied but are you SURE that it has the right amount of oil in it, if it was me I would drain out the present oil and refill it to be absolutely sure I had the right amount in it before I did anything, try putting just 1/2 litre in at a time, fill it slowly and allow the oil time to settle each time before pouring more in, use a measuring jug to be sure each time and use the info in your manual as a guide.
PS is it on the side stand or main stand when you fill it?