AABA Altaba Inc

By Nicole Friedman and Akane Otani 

Powerful forces have been roiling oil markets this year. There are the vagaries of Chinese demand, shifts in American production, the enigma of OPEC policy.

And then, of course, there's the imminent demise of Yahoo Messenger's old software version.

"I'm very upset," said Andy Lebow, an energy analyst and former oil broker who is lamenting the final days of the old version, which Yahoo plans to scrap Aug. 5 to steer customers to its new Messenger system. "My username is attached to all the people that I talk to. That's important to me."

For as long as many of them have been working in the field, tens of thousands of oil traders around the globe have relied on the Yahoo system when logging trades for millions of barrels of crude and fuels such as gasoline every day. But Yahoo's new Messenger won't separately archive chats and will include the ability to "unsend" a message, making it incompatible with many trading companies' regulatory requirements.

That's unsettling legions of oil traders who spend all day on Yahoo Messenger placing orders and circulating gossip, jokes and headlines the way others use Twitter.

"The first question that suppliers ask their customers in energy, and traders ask one another, is 'What's your Yahoo address?' " said Elaine Levin, president of brokerage Powerhouse, whose Yahoo username is elainetradesfutures.

Traders' Yahoo shorthand, cribbed from the futures market, includes a letter for each month (January is "F," December is "Z") and abbreviations for ports and storage locations. The phrase "how's WTI CS U7" translates: "What is the price for a West Texas Intermediate crude swap for September 2017?"

Brokers "blast," or simultaneously message, hundreds of people at once, with price information or a friendly "gm" (good morning).

Fuel trader Marc Refsoe Holm has his Yahoo username on his business card and said about 80% of his financial trades are over Yahoo Messenger. His habit puzzles new hires.

"Young people are like, 'Wait, what?' " said Mr. Holm, 33 years old, who is head of the U.S. fuel desk for Maersk Oil Trading Inc. "They are a little surprised that we're using such an old-school system."

On any given day, Mark Benigno, co-director of energy trading at INTL FCStone Inc., has 100 chat screens open. "Sometimes you're just BS-ing with people," he said. With some contacts, "you talk to them 50 times a day, like, 'Take a look at this YouTube'...It's like being a teenager."

That makes trading floors quieter than they used to be, said Ms. Levin, the brokerage president. "My bread and butter -- 'I need to do a TAS trade,' 'I have an EFP that needs to be posted,' " is all conducted over Yahoo, she said, rattling off transactions including "trade at settlement" orders and "exchange of futures for physical" trades.

The Messenger version's sunset date has inspired nostalgia among old-timers. Ernie Barsamian, chief executive of storage brokerage The Tank Tiger, in a note to clients wrote a poem:

"We all agree that Yahoo Messenger was the natural habitat/For traders to discuss whether the market was volatile or flat.../Now Yahoo thinks they are the windshield and we are the gnat."

Many traders express bewilderment, even anger, that Yahoo hasn't done more to accommodate them. "I still cannot figure out why Yahoo couldn't see the diamond they had," said Jorge Montepeque, a senior vice president at Eni Trading & Shipping.

A Yahoo Inc. spokeswoman said the company was aware of its central role in the oil market. Traders are a "small fraction" of Yahoo Messenger's millions of users, she said, adding that Yahoo is focused on its consumer audience with its new Messenger.

Instant messaging is popular with traders in every market, but Yahoo has a particular foothold in oil.

Some oil veterans take a less charitable view of Yahoo Messenger. Newer financial messaging systems tend to be more sophisticated, letting users share live data and charts and more easily record details about deals.

Mary Ellen Viola, a United-ICAP broker, communicates with friends and family on Facebook, Skype, Twitter and her iPhone. She has never used Yahoo Messenger outside of work, she said. "It's outdated."

When Yahoo launched it in 1998, Messenger was considered transformative. For years, oil trading was handled on exchange floors, with traders screaming at each other in chaotic pits or yelling into phones.

Once instant messaging arrived in the oil market, "I thought the floor was over," said Ray Carbone, president of Paramount Options, who used to work on the New York Mercantile Exchange floor. "I just smelled it." (Oil options are still traded on the Nymex floor, but not futures.)

It wasn't long before Yahoo Messenger reached critical mass and became an essential trading tool. "It snowballed," said Morgan Downey, who joined Yahoo Messenger in the 1990s while trading oil at a bank.

Brokers encouraged him to join the service, and soon the bank's customers, such as refiners and airlines, were also on the system, he recalled. "After six months," said Mr. Downey, now chief executive of data provider Money.net, "no one could leave Yahoo Messenger."

With oil's Yahoo Messenger era coming to an end, traders and brokers have been shopping around, signing up for multiple services or waiting to see what peers choose before making a decision.

The competition is fierce. Intercontinental Exchange Inc. cut the price for its chat application, ICE Instant Messaging, to zero in June and said its chat users are up 65% this year. CME Group Inc., which operates the Nymex, said it is using the Yahoo Messenger decommissioning to push its own instant-messaging application. Bloomberg terminals are widely used by banks, hedge funds and other traders, but many smaller participants in the oil market, such as gas-station chains, don't use the terminals.

Doug King, chief investment officer at RCMA Asset Management, said he already communicates via Bloomberg, WhatsApp, email and telephone.

And his peers who are groaning about life after Yahoo? "They're all dinosaurs," he said.

Write to Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

July 21, 2016 13:06 ET (17:06 GMT)

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