Natural gas closed down over 5% today, the last 3% after it was announced that legendary natural gas trader John Arnold is closing down his flagship Centaurus fund. Reuters reports the former Enron wunderkind struggled to maintain outsized returns with prices near 10-year lows and regulations tightening.

A person who answered the phone at Centaurus' Houston office said no one was available to comment.

* Main Centaurus hedge fund said to close-investor
* Arnold will return cash to investors
* High-flying natgas fund clipped by falling prices, regs

Centaurus, famed for gaining more than 300 percent in 2006 by taking bets opposite to those held by failed rival Amaranth Advisors, will return capital to investors, according to an investor in the fund who received a letter from Arnold earlier on Wednesday.

The Centaurus Energy Master Fund is the biggest one that is open to outside investors, the source said. Arnold had a total of about $4 billion assets under management last year, although the source estimated that the Master Fund held around $2 billion.

After the fund suffered its first-ever annual loss in 2010, Arnold, who turned 37 last year, reduced its size because of diminishing market volatility and tough new limits on commodity speculators. He returned $1 billion of capital to investors last summer. The fund gained less than 10 percent in 2011.

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