When smeared on an inanimate object, oil of cloaking masked any magical properties of the item for up to one day. Casting detect magic or similar spells did not reveal anything about the magical nature of the cloaked item. Casting legend lore on a cloaked item still revealed its history.
A flask of this oil could only be used once regardless of how much oil was used. A single flask could be used to cloak an item the size of a normal man or smaller.