Not so much a bug as a feature that bit you in the ass.
Lava != burning oil.
Fire/spilled oil you can put out. Lava, not so much. At higher levels you may be able to freeze it; I haven't experimented with that.
What may have been a bug is the pathfinding UI running your character through the lava. They've made some improvements to that, but it may well not be perfect yet.
