NEW YORK (CNN/Money) - The U.S. trade deficit narrowed in February, coming in below estimates with both exports and imports hitting a record as the weak dollar offset soaring oil prices, the government reported Wednesday.

The Commerce Department reported the trade gap fell to $42.1 billion in February, narrower than January's revised record level of $43.5 billion, and also narrower than economists' estimates of $42.5 billion, according to Briefing.com.

U.S. exports rose 4 percent to a record $92.4 billion, and imports gained 1.6 percent, also to a record $134.5 billion.

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The sensitive issue of trade with China seemed to improve as the deficit with the country fell to $8.3 billion, down from $11.5 billion in January, with exports to China rising 17 percent to $3 billion.

The average price of oil imported in February hit $29.17, the highest since March 2003, and is likely to climb in future reports following the Organization of Petroleum Exporting Countries' decision to maintain its production cut in April.