Martin Young, Warwickshire Waste Team Manager at Severn Trent, said a team was working with the Environment Agency, but the source of the oil was not yet known.
Mr Grewcock said the local wildlife group was alerted to the spillage by residents on Thursday morning.
“We went up there and looked around – it looks pretty bad,” he said.
“A load of birds have been taken out.
“It’s quite devastating really. I would presume a lot of these birds may have to be put to sleep.”
He said the oil was clearly visible around the edges of the lake, which is several acres in size and home to about 200 geese, ducks and moorhens.
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