Oil slipped toward $80 on Thursday as a stronger dollar encouraged investors to lock into profits from a 12-month high hit the previous day.

U.S. crude oil futures fell 63 cents to $80.74 a barrel by 1205 GMT (8:05 a.m. EDT), having dipped as low as $79.90. London Brent crude fell 49 cents to $79.20.

On Wednesday, U.S. crude surged to $82, the highest price since October last year, as weekly U.S. government oil data showed a large drop in gasoline inventories over the last week and fuel demand rising about 4 percent year-on-year.

But absolute oil inventory levels remained high globally due to slack demand.

A bounce in the dollar, from a low against the euro and a basket of currencies <.DXY>, weighed on oil prices, analysts said.

It is becoming almost imperative to trade the commodity markets from the perspective of the dollar these days, as nothing else seems to count for very much, MF Global wrote in a research note.

But analysts said the dollar was still in a longer-term downward trend partly because of the view that U.S. interest rates will remain low.

Energy bulls seem to be blindly betting on continued weakness in the dollar to fuel further gains, apparently ignoring the fact that almost everything else on the horizon is bearish to neutral, MF Global said.

Technical indicators, based on the study of historic price graphs rather than supply and demand factors, also suggested further gains in oil.

Global investors were watching corporate earnings for signals whether expectations of economic recovery and a related surge in energy demand were well-founded.

Swiss bank Credit Suisse's third quarter profit topped forecasts.

But World stocks as measured by MSCI and Europe's FTSEurofirst 300 <.FTEU3> fell due to poor earnings from other companies including mobile phone network gear maker Ericsson

(Additional reporting by Nick Trevethan in Singapore, editing by Anthony Barker)