* Crimea’s Moscow-backed parliament votes to join Russia
* U.S. President orders sanctions over Russian moves in Ukraine
* U.S. crude heads for first weekly drop in eight weeks
* Coming up: U.S. non-farm payrolls; 1330 GMT (Updates prices)
By Jacob Gronholt-Pedersen
SINGAPORE, March 7 (Reuters) - 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)