System and method for controlling engine operation

A system for operating an internal combustion engine (20) includes an intake valve (32) moveable between a first position at which fluid is blocked from flowing to or from the cylinder and a second position at which fluid is allowed to pass to or from the cylinder. The system includes a fluid actuator (70) selectively operable to hold the intake valve from moving to the first position for a portion of a compression stroke and a control valve (88) configured to control fluid flow between a source of fluid (84) and the fluid actuator. A fuel supply system (92) supplies a predetermined amount of fuel to the cylinder at an appropriate time during an engine cycle based on at least one engine operating parameter, and a controller (100) determines a need to de-rate the engine based on a sensed parameter relating to source fluid viscosity during a cycle in which the fluid actuator is not operated.