Hey guys, so I recently got my car back from the shop. Its a 1995 Dodge Avenger ES. Running hot or bad temp gauge?

Its a 1995 Dodge Avenger ES. The engine is the 6g73. IT was in the shop to replace a
rear axle and it was away for about a week. Now, the car runs fine. It sounds great and
doesn't seem to be running hot. Yet the temp gauge is going crazy. I got on the
highway after getting it today and it was cold. So i put my hazards on and didn't floor it
as I got so that nothing bad would happen. as the temp gauge got up to par i looked at
it and it was normal. Overtook a car looked back and it was rising high. I then slowed
down turning my hazards back on, as i let off the gas the temp gauge would fall. If i
stepped on it it would rise.  I pulled over and checked the car. Everything seemed fine.
Radiator fan was good, 1/2. It has run with one the year i've had it and never
experienced anything like this. Although I took off the oil cap and it was letting out
smoke. Could it just be a bad sensor for the temp gauge? or does the oil need to be
changed?