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@snottyotter
I had a deore go like that, there was a leak where the hose went into the lever, probably the barb being knocked in a little wrong, the oil was making the brake work but then as the pressure got higher with a good squeeze the oil forced it's way out of the hose but was contained by the outer hosing, looked like a little spit bubble inflating. Check the ends of the hose under any rubber boots, I guess it could happen at a kink anywhere along the hose though.