Citigroup (C) - Get Report reportedly ended talks over possibly taking a stake in the Amaranth hedge fund that recently lost some $4 billion in a week on a failed natural gas bet.

The development was reported by

The Wall Street Journal

, which cited someone familiar with the matter. The paper said the move increases the possibility that Amaranth will have to liquidate its remaining positions.

The fund, which once managed $9 billion in assets, told investors last week that it had sold "the entirety of our energy portfolio" after it lost billions on a series of calamitous natural gas trades. Market sources say Amaranth sold its energy portfolio to

J.P. Morgan Chase

(JPM) - Get Report

and Citadel, a big Chicago hedge fund.

Speculation has been growing on Wall Street that it's only a matter of time before Amaranth, which is based in Greenwich, Conn., closes up shop. Besides selling its energy portfolio, the hedge fund has been selling stocks and liquidating its holdings in dozens of so-called blank-check companies.