Why Does Compressed Air Need Drying?

All atmospheric air contains some water vapor which will begin to condense into liquid water when the air in a compressed air system cools to the saturation point, i.e., the point where it can hold no more water vapor. The temperature at which this happens is known as the dew point. This dew point is a key factor in determining how much drying is needed.  Condensation in the compressed air system would occur at the intake air saturation temperature (the dew point of the ambient air) if the temperature remained constant as air was compressed.