You're probably just dealing with a very sensitive gauge. As long as the pressure is up to normal, it's very unlikely there's anything wrong with the oil system. Another approach to dampening the needle movement on a gauge is to plumb the gauge with 1/8" diameter copper tubing, and wrap 4 or 5 turns around a large socket, making a coil of tubing about 1 1/2" in diameter or so. The "spring" effect of the coiled tubing has a tendency to dampen any pressure oscillations before the gauge responds to them. If you hide the coil behind the dash somewhere, it's out of sight, out of mind.
Jerry
