* Crimea's Moscow-backed parliament votes to join Russia
* U.S. President orders sanctions over Russian moves in
* U.S. crude heads for first weekly drop in eight weeks
* Coming up: U.S. non-farm payrolls; 1330 GMT
By Jacob Gronholt-Pedersen
SINGAPORE, March 7 Brent crude climbed towards
$108.50 per barrel on Friday, rising for a second straight
session as worsening diplomatic relations between Ukraine and
key oil producer Russia stoked supply fears.
But gains were capped as investors waited for U.S. non-farm
payroll numbers for clues on the health of the world's largest
economy and top crude consumer. The United States is heading
into spring when warm temperatures and refinery maintenance
typically curb oil demand.
"We will continue to see risk premium in relation to the
situation in Ukraine," said Mark Keenan, head of commodities
research in Asia at Societe Generale.
"A breakdown in Western-Russian relations can have a
knock-on effect on the situation in the Middle East, especially
in Syria where Russia did a lot of diplomatic work."
Brent was 20 cents higher at $108.30 a barrel at
0742 GMT. The contract settled up 34 cents on Thursday.
U.S. crude gained 29 cents to $101.85 a barrel, after
closing 11 cents higher.
But both benchmarks were on track to end the week down, with
Brent heading for a second straight weekly decline and the U.S.
contract for its first drop in eight weeks.
Oil prices spiked on Monday as Russian military intervention
on the Crimean peninsula rattled global markets, but then fell
more than $5 over the week as the risk of war faded.
The sell-off, however, did not last as worries over the
Ukraine situation returned after Crimea's Moscow-backed
parliament voted to join Russia on Thursday and scheduled a
referendum on the split for March 16.
U.S. President Barack Obama has ordered sanctions on those
responsible for Moscow's military intervention in Ukraine,
including travel bans and freezing of their U.S. assets, and
said the referendum would violate international law.
The market is now eyeing U.S. payrolls data, scheduled to be
released later in the day, for more trading cues.
A Reuters survey forecast an increase of 149,000 jobs in
February, stronger than the weather-depressed gains of 113,000
in January and 75,000 in December.
Recent disappointing U.S. data has been blamed on extreme
weather conditions in the country and Friday's non-farm payrolls
will be the first data that will not be distorted by weeks of
snowstorms and icy conditions in large parts of the country.
On Thursday, data showed U.S. jobless claims fell by 26,000
to a three-month low last week in a positive sign for the labour
market, but manufacturing activity slowed in January, indicating
a potential fall in energy demand.
The outlook for oil demand is also set to weaken as refiners
move into the maintenance season.
"We expect markets to ebb and flow on geopolitical news, but
increasingly factor physical indicators," Mark Pervan, global
head of commodity strategy at ANZ, said in a note.
"With northern hemisphere refineries starting to transition
to summer fuels in the coming weeks, we expect slightly weaker
performance across both benchmarks."
(Editing by Himani Sarkar and Prateek Chatterjee)