oil pressure sender is basically a switch. It has one wire going to it as it grounds itself to the block. You get 7psi of oil pressure, and it pops up to a set gauge location. Less than 7psi and it shows zero pressure.
My guess is either the connection to the sender is bad, or there is an issue with the wire. If you think it is possible that oil pressure is really going up and down, you should probably get a real pressure gauge in there, at least temporarily and verify actual oil pressure.