Oil surges on output cut extension but analysts caution upside is capped.

Oil is going to range trade between $40 and $55 per barrel while the marginal cost of production in the U.S. remains in the middle of that spectrum at around $50 per barrel, according to James Butterfill, Head of Research and Investment Strategy at ETF Securities.

“Every time oil tests that level…you see clients trading around it,” Butterfill observed, speaking on CNBC’s Squawk Box on Monday.

“Every time it goes below that $50 a barrel level, it’s a buying opportunity and roughly when it hits about $50, we see a lot of selling at that point,” he added.

The past week has seen a pick-up in flows with Butterfill noting that clients had bought around $130 million of crude oil in the past week with his firm, as part of year-to-date inflows to the asset class for his firm of around $340 million.

Analyst consensus now sees a cap on prices at around $60 according to Dean Turner, economist at UBS Wealth Management, also speaking on CNBC’s Squawk Box on Monday.

The real cap is on how much money the OPEC cartel can squeeze out of the rest of the world, thanks to American frackers.