Yes, it is possible if he picture is located at any web server

Yahoo Mail let you insert image in your message directly if the image is located at any Web server and if you use the rich text editor in Yahoo Mail.

To insert a picture from the web in an email with Yahoo Mail:
1. Locate the image on a web site, or open it directly using its URL (address).
2. Highlight the image — just the image — with your mouse.
3. Press Ctrl-C (Windows, Linux).
4. Position the cursor where you want the image to show up in an email you are composing in Yahoo Mail. Make sure you have enabled the Yahoo Mail rich text editor.
5. Hit Ctrl-V (Windows and Linux) or Command-V (Mac) to paste the image.