I believe the above answers are correct as to the cause of the problem. I would not add a grease or heavy oil to your movement unless you are very good at working on gauges. On the other hand, there may be an electrical solution to the problem. I have not tried this but if one were to put a capacitor across the gauge from power input lead to ground could it dampen the voltage swing or slow down the needle movement? Or maybe put the capicator in parallel with the sender, that would make a RC circuit and dampen the voltage drop across the sender. Some of the guys, like Atomarc, that are more familiar with fuel gauges might comment on this. It's just an idea.
