Patriot Coal Shares Jumped: What You Need to Know (PCX)

Patriot Coal Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Patriot Coal (NYSE: PCX ) jumped 10% today on word that natural gas giant Chesapeake Energy was cutting natural gas production.

So what: Chesapeake will cut 500 million cubic feet of natural gas production, with more cuts possible, in response to low natural gas prices. This represents 8% of the company's production, and has sent thermal coal producers higher today.

Now what: The theory is, if natural gas prices go up the utilities won't curtail coal usage as much as feared, increasing demand. That may be true to a small extent, but production of natural gas is still outpacing demand in the current environment and this would need to be a long-term rally to make a big difference for coal producers. I'm not buying this bump today and think it is a nice opportunity to cash out if you've been thinking about dumping coal shares.

Interested in more info on Patriot Coal? Add it to your watchlist by clicking here.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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