Fears that petrol could hit £1.50 a litre by late summer were fuelled yesterday as world oil prices hit yet another record. US crude oil surged to $114.95 a barrel after government data showed an unexpected fall in crude supplies. US crude stocks, which analysts expected to rise, fell 2.3m barrels last week, the Energy Information Administration said.

In London, Brent crude futures reached a record high of $112.73 a barrel, although both it and US crude later dropped back as dealers took profits.

The renewed surge in oil prices is down to a weak US dollar, in which oil is priced, along with inflows of speculative money and long-term constraints on supply. "The dominant factor is the US dollar and I expect this to continue," said Gerard Rigby, an analyst at Sydney-based Fuel First Consulting. "Whenever you get any kind of good economic news out of the US at the moment, the dollar will rise and oil falls, and the other way round, you get a new oil record."

The dollar fell to a new low yesterday against the euro of almost $1.60 after a barrage of weak news, the worst of which was a report showing housing starts had slumped to their lowest level in 17 years.

"After showing some signs of stabilisation in January and February, the March data on both home sales and construction have resumed their downward trend," said Julia Coronado, an analyst with Barclays Capital.

The pound also fell to a new low against the euro of 80.87 pence, a fall of 10% since the beginning of the year, making holidays to Europe more expensive. But the pound gained slightly against the dollar to $1.973 as the dollar weakened more than sterling. Dealers expect the Bank of England to make further cuts to interest rates, which is likely to undermine the value of holding sterling assets.

On Tuesday this week the website petrolprices.com predicted pump prices could hit £1.50 a litre in September.