Remember that spelling rule you learned in elementary school about doubling the final consonant before adding -ed or -ing to a verb? Well, if you remember, then you know that there is a little more to the story.
When making a past tense or a present participle of a verb, we can’t just go doubling final consonants recklessly and assuming that all is right in the world of spelling; no, that would be too easy. Here’s the rule (oh that’s right, descriptivists, I said RULE): When a word of more than one syllable ends in a single consonant that is preceded by a single vowel, and the accent is on other than the last syllable of the root word, do NOT double the final consonant before adding the -ed or -ing. The final consonant in cancel is -l, which is preceded by the single vowel -e, and the accent is on the -can. The past tense of cancel, then, is canceled, and the participle is canceling.
There are, of course, exceptions to this rule—what would rules be without exceptions—but cancel is not one of them. Oh, and neither is benefit, which I’ve also seen written as benefitted and benefitting; the correct spellings are benefited and benefiting. And that goes for travel, too; it’s traveled and traveling.
And now you know the rest of the story.