* U.S. crude stocks at record high

* Dollar hits 4-1/2 year high

* Nagging doubts on China recovery

* Goldman sees Brent gap with U.S. crude narrowing

(Adds quote, updates prices)

By Peg Mackey

LONDON, May 10 (Reuters) - Brent crude tumbled towards $102 a barrel on Friday as rising fuel supplies and a stronger dollar put oil under pressure.

The dollar hit a 4-1/2 year high against the yen, making commodities more expensive for holders of different currencies.

Gold sunk to a two-week low. MKTS/GLOB

"The higher dollar is putting on pressure - there's a lot of volatility in currencies and there is no strong underlying demand for oil," said Olivier Jakob of Petromatrix in Zug, Switzerland.

Brent LCOc1 was down $2.11 at $102.36 a barrel by 1356 GMT. U.S. crude CLc1 fell $2.23 to $94.16.

Supplies are also on the rise.

Stockpiles of U.S. crude hit another record level last week due to growing domestic production. EIA/S

And production from the Organization of the Petroleum Exporting Countries rose by 280,000 barrels per day (bpd) in April to 30.46 million bpd, according to secondary sources cited in the group's monthly report. ID:nL6N0DR1OU

Investors had grown more confident after the number of Americans filing new claims for jobless aid fell last week to its lowest in more than 5 years, underlining resilience flagged earlier by a strong April employment report.

But doubts persisted about the health of the world's No. 2 economy, China. While consumer inflation rose in April, China's factory prices fell for a 14th straight month. ID:nL3N0DQ0DU

In the first quarter, China's gross domestic product grew by a less than forecast 7.7 percent, frustrating investors who had hoped for a strong rebound of at least 8 percent.

U.S. investment bank Goldman Sachs said the spread between Brent and U.S. crude could shrink to $5 in the third quarter as the bottleneck at Cushing, Oklahoma, the U.S. midwest storage hub, eases as pipelines expand.

"... the opening of the Ho-Ho pipeline that connects the Houston crude market with the refineries in St. James will allow the glut of light sweet crude that is developing in the Texas Gulf Coast to be distributed more evenly on the entire US Gulf Coast," the bank said. ID:nL3N0DR1VC

Expectations that further capacity utilisation could suck more oil out of Cushing and over to U.S. refiners on Thursday pulled the spread between U.S. crude and Brent to $7.47 - its narrowest since 2011.

The spread on Friday widened out to around $8.19.

Oil may draw some support from heightened tension in the Middle East after Hezbollah leader Hassan Nasrallah said Syria would respond to Israeli raids around Damascus by giving his group more sophisticated new weapons. ID:nL6N0DQ3F8

(Additional reporting by Luke Pachymuthu in Singapore; editing by David Cowell)

((Peg.Mackey@thomsonreuters.com)(+44 207 542 7714)(Reuters Messaging: peg.mackey.thomsonreuters.com@reuters.net))

Keywords: MARKETS OIL/