* Putin orders troops in military exercise back to base
* U.S., EU warn Russia could face sanctions over Crimea
* U.S. crude stocks at Cushing likely off 2.6 mln barrels - API
* Coming up: EIA data out on Wednesday 10:30 a.m. EST (1530 GMT) (Updates with API data, paragraphs 9, 10)
By Elizabeth Dilts
NEW YORK, March 4 Crude oil fell nearly 2 percent on Tuesday on comments from President Vladimir Putin that eased concerns Russia would escalate its military intervention in Ukraine's Crimea peninsula.
Putin told reporters Russia reserved the "right" to intervene in the Ukraine crisis, but would only use force as a "last resort."
Coupled with news that Russian troops engaged in military exercises near the Ukraine border were ordered to return to their bases, oil prices slid from the five-month highs it reached Monday.
"The receding fears of a disruption of the Russian crude oil supply and the easing geopolitical concerns are weighing on crude," said Dwayne Pliska, senior trading consultant for HighGround trading in Chicago, Illinois.
April Brent crude settled $1.90 lower at $109.30 a barrel, after it ended the previous session at its highest close this year.
U.S. crude for April delivery settled $1.59 lower at $103.33, after rising to $105.22 on Monday, the highest level since Sept. 19.
Oil products prices retreated in tandem with U.S. crude. New York ultra-low sulfur diesel futures, often called heating oil, fell nearly 4 cents to $3.0407 per gallon, after it settled more than 6 cents higher at $3.0805 in the previous session.
U.S. gasoline RBOB fell by more than 3 cents to $2.9853 per gallon after it settled more than 4 cents higher a day earlier.
U.S. commercial crude oil inventories rose by 1.2 million barrels last week, in line with expectations, inventory data released by the American Petroleum Institute showed on Tuesday. Stockpiles at Cushing, Oklahoma, where the American benchmark is priced, fell by 2.6 million barrels, the data showed.
The government's Energy Information Administration will publish its data on Wednesday at 10:30 a.m. EST.
Putin's statements raised investors' hopes for a peaceful resolution with Ukraine. The crisis caused a sell-off in global equities on Monday as investors worried the oil supply from Russia, the world's second largest producer, could be disrupted or subject to sanctions.
Imports of Russian oil are so crucial for Europe that it is unlikely sanctions will be imposed, said Seth Kleinman, head of energy research at Citi.
In Libya, top officials production at the El Sharara oilfield may resume as they are working to address protesters demands. Production there has fallen to little over 200,000 barrels per day from 1.4 million bpd in July due to protests that closed the oilfield in the eastern region of the country. (Additional reporting by Simon Falush and Shadi Bushra in London, Florence Tan in Singapore; Editing by Marguerita Choy)