That is a "hip flask" that was used by the D&H operating crews during Prohibition and the Depression. They had extra baggy overalls to cover up just such an item. Filled with bathtub gin, just what was needed to pass a few hours while waiting for a "high ball" to get back to your home terminal....
Kidding aside, it looks like an oil can. Too small to hold any meaningful amount of water. Maybe valve oil for superheated loco's ? Maybe just a different style of journal box oil can ? Clearly it's an oil can of some sort, maybe you could use it with an "add on" spout ?