Western Canadian Select

Plans to halt construction of the Keystone XL pipeline will likely mean more crude oil volumes being shipped by rail. But how much more will depend on a variety of factors, including oil price spreads, other pipelines, oil storage options and the railroads’ ability to juggle volumes.

Canadian Pacific, CN, and the Canadian government are taking steps to ease the social and reputational risks, according to a Monday report by Moody’s Investors Service.

We see falling demand for oil, lumber, and wheat out of Canada in the future due to a combination of market forces. Canadian Pacific Railroad appears to be especially exposed to this freight recession.