Originally posted by dian
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The build-up tends to come off and stick to the work at unpredictable intervals, leaving a rough finish. Oil tends to discourage the build-up, so the problem is reduced.
Also, with "sticky" or "gummy" materials, like some aluminum alloys, oil can let the cut material slide away easier over the tool surface, which tends to reduce "tearing" of the surface, encouraging true 'cutting".
These problems are usually less with really light cuts, and if the problem is reduced, the solution is harder to observe working.
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