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Possible rail strike threatens Canadian oil recovery

  • Teamsters Canada tells Canadian Pacific Railway (NYSE:CP) that workers will go on strike starting April 21 following a stalemate in negotiations between the two parties.
  • A strike would come at a critical time for western Canadian oil producers who have been struggling to get their crude out, as "a rail strike would stretch or constrain CP, one of the major rail lines, at a time when its most needed," says IHS Energy's Kevin Birn; CP is Canada's second biggest rail shipper after Canadian National Railway (NYSE:CNI).
  • While the maintenance shutdowns of oil sands upgraders, including Syncrude Canada’s plant near Fort McMurray, combined with rail lines moving “a little more" crude has helped alleviate bottlenecks, Birn says the discount for Western Canadian crude could widen back out to $17-$19/bbl once Syncrude resumes operation - if a rail strike does not happen.
  • Potentially relevant tickers include TRP, SU, ENB, CVE, ECA, IMO, CNQ, OTCPK:MEGEF, OTCPK:ATHOF, OTCPK:HUSKF

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