“I saw this article today about the use of rail in Canada for shipping oil. Although I knew it was happening, I had not realised it was quite so significant.

“Crude on the rails: in for the long haul”:  

“CNR has a lovely chart I think?

“Thanks for the usual exemplary guidance from both of you. Much appreciated.”

Eoin Treacy's view Thank you for your kind words and this interesting article highlighting the dependence of some Canadian oil companies on rail transportation. Given the uncertainty over new pipeline construction, rail is likely to play an important role in oil transportation. Considering the historically high price of oil, companies will find a way to get their product from relatively remote areas to market. Rail is an obvious solution and has the benefit of existing infrastructure. (Also see Comment of the Day on September 27th 2011).

Canadian National Railway (1.65%) has indeed been trending impressively since early 2009. However it is becoming increasingly overextended relative to the 200-day MA. On previous occasions when it has become temporarily overbought it has reverted to the mean. Therefore it is now also susceptible to mean reversion.