Bytes and barrels: the origins of oil traders' love of Yahoo

Thu Jul 28, 2016 1:06am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Catherine Ngai

NEW YORK (Reuters) - For the oil industry, Yahoo Inc's YHOO.O decision this week to sell its core business to Verizon Communications Inc (VZ.N: Quote) for $4.8 billion does not matter all that much. Their world already changed a few months ago, when the company said it would jettison its messaging system that has been the norm for oil traders since the late 1990s.

Back then, Yahoo's technology revolutionized the industry, helping usher in a new era of high-speed communication that changed the way millions of barrels of oil traded daily. For Gene Grabinski, who was trading crude in Chicago for BP Plc (BP.L: Quote), one of the largest energy companies in the world, it was just the solution needed to stem the endless flood of phone calls as he bought and sold crude in the Midwest and U.S. Gulf.

And it came about only because he saw his young daughters using messaging services back in the late 1990s.

Come Aug. 5, Yahoo is scuttling its legacy instant messaging service as it seeks to move users to its new Messenger platform, which traders will not use because it fails to meet the industry's compliance standards. The announcement was made in June, prior to the Verizon deal. A company spokeswoman said that Yahoo will focus efforts on its new system, which will deliver better personal communication experiences to its users.

For almost two decades, tens of thousands in the oil industry relied on the old Yahoo Messenger system, which launched in 1998. At that time, Grabinski was one of just two traders responsible for trading physical, domestic crude for BP, which owns some of the nation's biggest refineries including its facility in Whiting, Indiana, and previously Texas City, Texas.

But Grabinski had a problem. Every day, his phone "looked like a Christmas tree," he said, with red and green lights blinking as a flood of brokers called and were put on hold while Grabinski tried to gather market prices.

After seeing his younger daughters, 11 and 7, use online instant messaging to chat with friends, he figured he could use the same system at work at the British major.

"The 11-year-old was on it and we were actively monitoring it at the time. I was aware of it, but I wasn't really doing it until it came up and I had the potential to use it in the work context," said Grabinski, who traded crude for more than a decade at BP starting in the early 1990s.   Continued...

Oil traders work in the pit of the New York Mercantile Exchange in New York, U.S. on January 12, 2007.   REUTERS/Shannon Stapleton