When the engine runs at the optimum temperature, its oil is hot, about 180 F, and is able to vaporize water that accumulates because of blow by. But in an engine running under moderate load, even when the coolant reaches normal operating temperature, the oil temperature often remains cooler. The consequences of running an engine with "cold" oil are an increase in sludge and varnish production within the oil and water contamination.
Sludge, often brown or tan in color, is a combination of water, carbon, and other contaminants, and it impedes oil flow. Varnish is a much harder precipitate, and it adheres tenaciously to metal surfaces within the engine. Both of these contaminants starve vital engine components of lubricating oil.