Coal Sector Rallies; Short Interest A Factor?

Arch Coal Inc.

gained more than 17 percent Tuesday and a raft of coal producers headed in the same direction after Arch said cheaper oil will cut its 2015 production costs. But a short squeeze have a role in Tuesday's sector rally: With coal prices at their lowest level in six years, shorts have targeted an increasing portion of producers' float. Arch also suspended its dividend Tuesday, citing "ongoing market weakness" and a need to "preserve liquidity." Arch posted a wider-than-expected loss but revenue beat Wall Street views by a modest margin. Short interest recently accounted for nearly 24 percent of Arch's 212.3 million shares outstanding. Arch changed hands recently at $1.09 a share up $0.14 cents. Arch's dividend suspension follows a similar move last week by Peabody Energy Corp.

, which gained more than 7 percent Tuesday, changing hands at $7.06 a share. Nearly 20 percent of Peabody's 271.4 million shares outstanding was held as short interest as of Jan. 15. Walter Energy Inc.

gained more than 9 percent recently, changing hands at $1.04 a share. Short interest recently accounting for about 43 percent of Walter's 68.1 million shares outstanding. Consol Energy Inc.

gained more than 5 percent to W31.88, with nearly 8 percent of its 230.3 million shares are held as short interest. Rhino Resource Partners, L.P.

picked up 6 percent, changing hands at 2.43 a share, although little of its float is held as short interest.