There are a couple of different Sniff Test fluids around, one detects CO2 in the water (which turns it acidic) and is best for Petrol / LPG engines, the other detects Hydrocarbons and is probably better for Diesel engines.
Oil is made of hydrocarbons but they tend to be 'big' molecules (long chains, high molecular weight), the chemicals used in the sniff test react best to 'small' molecules (low molecular weight, often unsaturated, reactive) which tend to be found in combustion products. The fluids have a very poor sensitivity for the molecules found in most oils.