condensation??

I was checking out some of my plumbing in the cellar, and the previous owner has some of the cold water supply line all tightly wrapped up with tape and some sort of insulation. Now when I squeeze that pipe, water comes out, now is that from condensation, from it being a very cold pipe and my cellar being heated, or do i have a leak??? I really don't want to start ripping out the tape/insulation combo if i don't have to, there is quite a bit of it.
Any suggestions
Barry

Exclusion of air from contact with the pipe usually limits condensation. IE insulation.

This time of year in the northeast humidity and the dew point is pretty low.

I suspect leakage.

But there is no water on the floor underneath the wrapped pipes. And my cellar is heated, the temp of the pipe with the water running is cold to the touch. I thought if there was water on floor..would be the dead give away for a leak.??