By Allison Lampert and Julie Gordon
MONTREAL/VANCOUVER (Reuters) - Canada's biggest rail union said no progress had been made in negotiations on Friday with Canadian Pacific Railway Ltd (TO:CP) to reach a deal before a Saturday deadline as worries about a potential strike weighed on the country's crude oil prices.
If the two sides fail to reach a deal, a strike that would begin on April 21 would be the union's third in six years. Management and union workers are grappling over issues such as schedules to reduce fatigue management, the union said. This would add hurdles for shipments of potash, crude oil and grains as demand soars for already congested rail service at CP and its larger rival Canadian National Railway (TO:CNR).
Chris Monette, spokesman for the union, Teamsters Canada Rail Conference, said "negotiations have not progressed at all." The union represents about 3,000 CP locomotive engineers and conductors. A second union representing about 360 railroad rail signals staff at Canada's second-largest railroad also plans to walk off the job.
A CP spokesman was not immediately available for comment but the company said on April 18 it would continue to bargain in good faith and remained committed to achieving a win-win solution.
Some analysts said Canada's federal government would likely legislate strikers back to work.
"I believe that if a strike were to happen, it will probably be short lived because so many commercial interests will be affected," wrote Edward Jones analyst Dan Sherman by email.
Western Canada Select heavy blend crude for May delivery in Hardisty, Alberta, settled at $21 below the West Texas Intermediate on Thursday in thin trade, well above Monday's settle of $14.40.
Canadian oil prices trade at a discount to the U.S. benchmark and the heavy discount is expected to persist for the foreseeable future, as rising production in Alberta's oil sands outstrips shipping capacity, with the rail uncertainty adding pressure to an industry already hurt by pipeline constraints.
"It is another factor that illustrates the fragility of our export capacity at a time we are still working through supply overhang," said Tim Pickering, president of Auspice Capital.
On Thursday, Canadian Labour Minister Patty Hajdu said she expected all parties to stay at the table until a deal was reached.
Wade Sobkowich, executive director of the Western Grain Elevator Association, said the grain sector already has a backlog of 6,058 railcar orders for CP to fill.
"Even a stoppage of two or three days will create a loss in capacity that cannot be afforded," he said by email.