This is a property of thin films, one thing to remember is that there is some thickness to the oil. When light hits the top surface of the oil, some of the light is reflected
…and some through the oil and gets refracted and then reflected off the bottom of the oil. This gives of light that is slightly out of phase with the part of light that reflected off the top. Depending on how thick the oil is will affect how out of phase they are. Some of the wavelengths of light will conspire against each other and cancel out. The wavelengths that don't cancel may be in the visual spectrum that you are able to see. (MORE) 
