The bodies of missing Colorado mother Shanann Watts and her two daughters have been located inside a fuel tank days after she vanished, reports say.

Her husband Chris Watts has been arrested on suspicion of murdering his entire family. His arrest came one day after he appealed for their return.

Local media said the tanks were nearly full when Mr Watts allegedly hid their bodies there to conceal the odour.

The couple had financial troubles, and she suspected her husband was cheating.

In the aftermath of her death, a stunned mountain community is left wondering what could have led to the murder.

Mrs Watts, 34, who was 15 weeks pregnant, and the couple's children Bella, four, and Celeste, three, went missing on Monday.

The bodies were found inside oil and gas tanks on the premises of a petroleum company where Mr Watts worked, unnamed sources told local media

He was fired from the company - Anadarko Petroleum - on Wednesday after his arrest.

Police suspect all three were killed inside their home, but they have not yet released a cause of death.

Mr Watts is being held on suspicion of three counts of murder and tampering with evidence, report local media. (BBC)

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