Water can be present in oil as free water and dissolved water. In the same way that air is said to have 100% relative humidity when it contains all the water vapor it can hold, oil is said to be saturated when it contains all the dissolved water it can hold. Free water can be present only after the amount of dissolved water in the oil has exceeded the saturation point. Oil containing free water will appear hazy or cloudy.Free water settles in quiescent areas of sumps, reservoirs, bearing pedestals, and governors. Even oil with good rust inhibitor cannot completely protect components from settled free water. The rust created from corrosion is carried throughout the system, acting as an abrasive agent, causing wear.