WASHINGTON (Reuters) - The U.S. trade deficit narrowed unexpectedly in November to the smallest gap since July 2005, as a weak dollar and strong economic growth abroad helped push exports to a record, a Commerce Department report on Wednesday showed.

The trade gap shrank 1 percent to $58.2 billion, surprising analysts surveyed before the report who had made a median forecast of $59.9 billion. A drop in oil prices and oil imports also trimmed the monthly trade shortfall.

Despite the slight monthly narrowing, the trade gap through the end of November totaled $701.6 billion, keeping it on track to set a new annual record for 2006.

"It is looking better, but it is still humongous," said Kurt Karl, head of economic research and consulting at Swiss Re in New York. "The movement in the dollar has helped, and the weakness in the U.S. economy has helped, and the strength in foreign markets has helped."

The closely watched trade deficit with China totaled $213.5 billion through November, shattering the 2005 annual record of $201.6 billion and keeping it on pace to finish 2006 in the range of $230 to $240 billion.

U.S. exports of goods and services grew nearly 1 percent in November to a record $124.8 billion. Goods and services exports also set records in their individual categories, as did capital goods and consumer goods.

The strong export performance and narrower trade gap could prompt analysts to raise their estimates of fourth-quarter 2006 U.S. economic growth.

The dollar rose against the euro in early trading after the report, while U.S. Treasury debt prices had little reaction to the data.

The average price for imported oil fell for the third consecutive month in November to $52.25 -- the lowest level since January 2006 -- as mild U.S. temperatures helped trim demand. Total petroleum imports at $21.5 billion in November were the lowest since July 2005, the Commerce Department said.

U.S. imports of consumer products ahead of the Christmas holiday hit a record.

Imports from China slipped 5.2 percent in November to $27.8 billion, but still totaled $236.6 billion for the first 11 months of the year. The monthly trade gap with China narrowed nearly 6.0 percent to $22.9 billion.

In a separate report, the Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, jumped 16.6 percent to 671.1 for the week ended January 5.

While the increase offered a hint the shaky U.S. housing market could be stabilizing, a four-week moving average of mortgage loan activity showed a decline of 2 percent.