Crude-by-rail volumes expected to grow in 2015 despite price volatility

MONTREAL — Volatility in energy prices is expected to be a “wild card” for Canadian railways in the long term, but an industry analyst says crude-by-rail volumes should continue to grow, albeit more slowly, this year.

Analyst Walter Spracklin of RBC Capital Markets says he believes energy volumes are secured by contracts through 2015.

Canadian National Railway (TSX:CNR) and Canadian Pacific Railway (TSX:CP) posted strong double-digit growth in petroleum products in 2014.

It was one of the bright spots on the year for CP, whose total volumes fell 0.6 per cent on decreases in six of 10 commodity groups due to contract losses and lower coal traffic. Average weekly energy volumes improved since the second quarter despite the volatility of WTI prices.

CN Rail led the North American industry last year, with total carloads increasing 8.2 per cent for the 52 weeks ending Dec. 27, according to data from the Association of American Railroads.

The price of West Texas Intermediate crude, the U.S. benchmark, fell to US$48.96 a barrel on Tuesday, the fourth straight day of declines and the lowest level since April 2009.