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Oil prices slump after spike higher

Oil prices retreated from the prior day's surge as tension eased over the Ukraine crisis, tamping down concerns about potential supply disruption.

NEW YORK: Oil prices retreated on Tuesday from the prior day's surge as tension eased over the Ukraine crisis, tamping down concerns about potential supply disruption.

The benchmark US crude futures contract, West Texas Intermediate (WTI) for April delivery, shed $1.59 to close at $103.33 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for delivery in April, the key European contract, tumbled $1.90 to $109.30 on the Intercontinental Exchange in London.

On Monday, WTI had closed at its highest level since September and the Brent finished at a peak for the year to date.

Oil prices jumped Monday amid a fierce standoff between Russia and the West over Ukraine, where Kremlin-backed troops have had de facto control of the Crimean peninsula since late last week.

But on Tuesday, oil futures retreated as Russian President Vladimir Putin declared there was currently "no need" to send troops into Ukraine.

"With Russia recalling troops participating in military exercises on the Ukrainian border and more conciliatory comments from Putin, commodity markets have retraced their gains from yesterday," Morgan Stanley analysts said in a market note.

"While we expected the Russian risk premium to fade, we would caution against complacency so early in the process."

Producing more than 10 million barrels a day in January, Russia vies with Saudi Arabia as the world's largest crude oil producer, and is the second-largest producer of natural gas.

More than 70 percent of its gas and oil exports to Europe pass through Ukraine.

Traders also were looking ahead to the US Department of Energy's weekly oil inventories report on Wednesday, "with expectations assuming the seasonal maintenance-inspired stance of rising oil stocks, falling products," said Matt Smith of Schneider Electric.

Commercial crude oil supplies in the United States, the largest consumer of crude, are expected to have increased by one million barrels and distillate products, including heating oil, to have fallen by two million barrels, according to analysts polled by Dow Jones Newswire.

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