heres some info from steve baz's site
Engine Oil Requirements
The most common problem with Ford's 7.3 Direct Injection Turbo diesel is related to engine oil change interval and type of oil being used. It is critical for proper engine operation that the customer or technician servicing the vehicle check that the correct oil is being used. This engine uses a high-pressure oil pump to operate the fuel injectors.
Typical system pressures are 500 psi at idle, 1200 at 3300 rpm in neutral, and 3600 psi at full load acceleration. Oil for the PowerStroke requires an anti-foaming agent to prevent the oil from aerating, which would result in poor fuel injector spray patterns and reduced power. Depending on vehicle usage, the anti-foaming agents are depleted in 3000-5000 miles.
The only oil recommended for the PowerStroke by Ford is Motorcraft Super Duty 15W40, 10W30. Each of these has the proper additives in them for use in a diesel engine including the anti-foaming agents. The 15W40 is recommended for normal climates, the 10W30 for temperatures below 20 degrees Fahrenheit. For temperatures below -10 degrees, 5W-30 is recommended. There are other oils, however, that do meet all the requirements for use in the PowerStroke. The specifications the owner needs to look for on the label are the API rating of CF-4/SH or CG-4/SH or higher. Some other oils with the correct ratings are:
Penzoil Long-Life 15W40
Shell Rotella-T 15W40
Chevron Delo 400 15W40, 10W30
Mobil Delvac 1300 Super 15W40
Castrol Heavy-Duty 15W40
Valvoline All-Fleet Plus or Cummins Premium Blue:
Union 76 Guardol QLT 15W40
Wal-Mart's Tech 2000 Universal 15W40
Texaco Ursa Super Plus 15W40, 10W30
Quaker State FCI Universal 15W40, 10W30
Quaker State FCI HDX Plus 15W40
Kendall Super-D 3 15W40, 10W30
Kendall SHP Diesel 15W40
For those of you wishing to use synthetic oil, the only ones I have seen with the correct specs for the PowerStroke engine are:
Motorcraft Super All Season 0W-30 Semi Synthetic
Amsoil Series 3000 Synthetic 5W30 Heavy Duty Diesel Oil
Amsoil 15W40 Synthetic Heavy Duty Diesel and Marine Oil
Amsoil 10W-40 and 20W-50 Synthetic High Performance Motor Oil
Amsoil 15W40 Semi-Synthetic Gasoline and Diesel Oil
Mobil Delvac 1 High-Performance Synthetic, Heavy Duty Diesel Engine Oil 5W40
Quaker State 4X4 15W40 Synthetic Blend
Shell Rotella SB (synthetic blend)
Royal Purple Synthetic 10W-30 and 15W-40 EO-L 5W-30, 10W-30, 20W50
Schaeffer's Supreme 7000 Synthetic Blend 15W-40
If these are unavailable you can use a multi-grade synthetic designated CF for use in diesel engines along with an anti-foaming additive. Some synthetic oils with this rating are:
Mobil 1
Castrol Syntec
Valvoline SynPower
Quaker State Syncron Ultra Performance
Recommended anti-foaming additives are Fleetrite with the Navistar P/N CH1824392 or Lubrizol 888. These are primarily used to counter the effects of silicone sealers on the anti-foaming agents in the oil or if the agents become depleted from use providing the oil is still serviceable and uncontaminated. An anti-foaming additive could also be used between oil changes if an oil-related poor running condition is suspected, especially on a long trip.
Under normal driving conditions the additive could extend the oil change interval to 6000 miles. For vehicles that are used for infrequent towing, using the additive at 3000 miles could extend the oil change interval to no longer than 5000 miles. Vehicles operated in dirty conditions, extreme weather conditions or constantly under heavy loads should stick to the 3000 mile service interval due to the other agents in the oil being depleted, and should only use the anti-foaming additive if performance problems occur between services.
The refill for the crankcase is 14 quarts for 94-97's and 15 quarts for 98.5/99's with filter change. Some early 95 and older engines were equipped with a 12-quart dipstick (Navistar P/N 1820068C1) and need to be filled to just over the word "FULL", or replaced with the correct part (Navistar P/N 1824405C1; Ford P/N F4TZ-6750-E for F-series; F5UZ-6750-A for Econoline). Some later dipstick tubes were not seated properly causing the crankcase to be over-filled in an attempt to bring the level up to the mark. The oil filter for the PowerStroke (Motorcraft P/N FL1995) is longer than that of the previous Ford/Navistar diesel, and the old-style filter should not be used. Due to its seal design, the oil filter should be hand tightened, then turned an additional quarter-turn--or torqued to 20ft/lbs--with the oil filter wrench to prevent leaking.