Sounds like the oil is cleaning the rod/shaft that goes up and down attached to the needle? If that is the case, get a soft piece of light fabric and wipe the shaft as much as you can, as you use the hand wheel to manipulate it. When no more black comes off on the fabric scrap, run the machine and sew again with scrap square. If still doing it, add a little more oil and repeat the process until it comes clean. Be very sure all the blackened oil is out of the thread/machine before doing your next project!