* Russia says battalion withdrawing from near Ukraine border
* Yellen defends Fed policies, cites slack U.S. labor market (Updates prices to settlement, adds analyst view, U.S. inventory forecast)
By Robert Gibbons
NEW YORK, March 31 (Reuters) - Crude futures dipped in volatile end-of-quarter trading on Monday, pulled off highs by news Russia was withdrawing some troops on the Ukrainian border and concerns about the struggling U.S. labor market voiced by Federal Reserve Chair Janet Yellen.
"Any sign that tensions might ease in the Russia-Ukraine situation is going to be bearish," Phil Flynn, analyst at Price Futures Group in Chicago, said.
Crude futures had seesawed before being weighed down by news that Russia is withdrawing a motorized infantry battalion from a region near Ukraine's eastern border, according to a Russian Defence Ministry spokesperson quoted by state news agencies.
"I would say that given that equities were pretty strong, really this is a day where oil traders were ... booking some profits and looking at the fundamentals and seeing a picture of slowing demand in the second quarter particularly in the U.S.," said Addison Armstrong, Senior Director of Market Research at Tradition Energy.
Janet Yellen, in her first public speech since taking the reins at the Fed, said on Monday the U.S. central bank's "extraordinary" commitment to boosting the economy, especially the still struggling labor market, will be needed for some time to come.
"I think Fed's Janet Yellen saying that the U.S. economy needs support for some time, may have caused the market to come off," said a New York-based broker.
But other market participants thought Yellen's defense of the Fed's easy money policies should be supportive to commodities because of the boost to liquidity provided by the central bank's bond buying.
Brent crude for May delivery fell 31 cents to settle on Monday at $107.76 a barrel, having earlier fallen to $107.05 after reaching $108.33.
Front-month Brent posted a 2.7 percent loss for the quarter, after two consecutive quarterly gains, as rising supply from Iraq and increased exports from Iran have offset supply disruptions in Libya and Nigeria.
U.S. May crude fell 9 cents to settle at $101.58 a barrel, after trading from $100.88 to $101.97. U.S. crude posted a 3.2 percent gain for the quarter, up after a nearly 4 percent drop in the previous quarter.
Expiring U.S. April RBOB gasoline and heating oil both settled nearly 1 percent lower on Monday, with May contracts also posting lower settlements.
Helping keep oil prices in check on Monday was news Iraq has started production at the giant West Qurna-2 field, moving closer to its output target of 4 million barrels per day (bpd) this year.
Fellow OPEC member Libya is pumping a little over 160,000 bpd of crude oil, about one tenth of pre-civil war production, and gas exports to Italy are flowing normally but a condensates pipeline from the Wafa field is closed, a spokesman for state-run National Oil Corp (NOC) said on Monday.
A leader from the Libyan rebel's tribe told state media on Monday that rebels in eastern Libya are close to reopening three oil ports they have occupied since the summer.
Nigerian crude exports are set to fall to their lowest since 2009 due to a production outage for the Forcados grade.
Ahead of weekly reports on U.S. crude oil inventories, analysts surveyed on Monday yielded a preliminary forecast for crude stocks to have risen 2.5 million barrels last week.
Distillate stocks were expected to be down 700,000 barrels, with gasoline inventories seen down 1.5 million barrels.
Crude oil prices were supported early on Monday by ongoing worries about the crisis in the Ukraine.
U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov held talks on Sunday about ways to defuse the crisis over Ukraine, with Kerry telling Moscow progress depended on a Russian troop pullback from Ukraine's borders.
The West is considering more sanctions on Russian industries including its oil and gas sector after the annexation of Crimea. (Additional reporting by Christopher Johnson in London and Florence Tan in Singapore; Editing by Jason Neely, Bernadette Baum and Diane Craft)