May 7 (Bloomberg) -- Natural gas in New York advanced to the highest since December 2005 as crude oil rose to a record.

Oil touched $123.80 a barrel, the highest price since futures began trading in 1983. Gas touched $11.387 per million British thermal units, the highest since $11.88 per Btu on December 29, 2005.

``Gas has been tracking crude more than not of late,'' said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis.

Natural gas for June delivery rose 17.7 cents, or 1.6 percent, to settle at $11.327 per million British thermal units at 3:11 p.m. on the New York Mercantile Exchange. Gas has gained 51 percent this year.

Crude oil for June delivery rose $1.69, or 1.4 percent, to settle at $123.53 a barrel in New York. Futures have more than doubled in the past year.

Oil stockpiles rose 1.8 percent to 325.6 million barrels last week, the highest since August, an Energy Department report today said.

Oil traded at $122.04 a barrel before the release of the report at 10:30 a.m. in Washington.

Gas also advanced amid speculation a government report tomorrow may show stockpiles rose less than the average for this time of year.

Gas Inventory

Inventories rose 62 billion cubic feet last week, according to the median of 15 analyst estimates compiled by Bloomberg. The average change for the comparable week over the past five years is a gain of 73 billion cubic feet, according to department data.

``We're getting prepared for a number tomorrow that on the injection side will be below the five-year average and last year,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``These injections seem very low. These numbers are adding more and more concern to an already tight market.''

Gas stockpiles for the week ended April 25 gained 86 billion cubic feet to 1.371 trillion, the department said in a May 1 report. Stockpiles were 255 billion cubic feet, or 16 percent, lower than a year ago and 3 billion below the five-year average.

The department is scheduled to release its weekly gas report tomorrow at 10:30 a.m. in Washington.

``We haven't been able to narrow the supply deficit much, despite the fact that production is very strong,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``Increased production is being negated by a decline in imports.''

Gas Production

Gas production in the U.S. is up about 5 percent this year, boosted by output from the Barnett Shale in Texas, though lower imports from Canada and fewer cargoes of liquefied natural gas, or LNG, have limited supply gains, said Ritterbush.

Canadian production in April averaged about 16.3 billion cubic feet a day, about 680 million cubic feet a day below a year earlier, Martin King, an analyst at FirstEnergy Capital Corp., said in a May 5 report.

He forecast Canadian output would average about 850 million a day less for this year, reducing the amount available for U.S. import.

May LNG imports are averaging about 900 million cubic feet a day, compared with 2.9 billion cubic feet a day in the same month of 2007, Stacy Nieuwoudt, an analyst at Tudor, Pickering, Holt & Co. in Houston, said in a note today.

Shipments into the U.S. for the first quarter were 800 million cubic feet, less than half of the 1.9 billion cubic feet in the same quarter a year earlier, she said.

Higher prices in Europe and Asia lured LNG to those markets in the first quarter. LNG is gas that is super-cooled to a liquid for transport by ship to markets not connected by pipelines.

The Energy Department yesterday revised its estimate for LNG imports to 580 billion cubic feet this year from 680 billion in its April outlook. The U.S. imported 770.8 billion cubic feet in 2007.

A decline in distillate stockpiles, which includes heating oil, also helped lift gas prices, said Neill.

Distillate Stockpiles

Distillate supplies fell 0.1 percent from the previous week to 105.7 million barrels, about 11 percent below a year earlier, according to the department.

Oil used to heat buildings and operate power plants traded at a premium to gas in New York, which increases the attractiveness of natural gas as an alternative fuel.

Heating oil for June delivery climbed 9.38 cents, or 2.8 percent, to settle at $3.4473 a gallon in New York after touching a record $3.4535 a gallon.

Based on the most recent cash market prices, gas is valued at $11.96 per million Btu compared with $15.06 per million Btu for fuel oil, according to data compiled by Bloomberg. Heating oil at $24.82 per million Btu equivalent is double the price of gas.

To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

Last Updated: May 7, 2008 15:58 EDT