my scalp turns hot when i apply oil.. WHY??!

30%+ of the excess heat given off by the human body to regulate temperature is directed through the scalp. If you put oil over that heat source, it has the same affect as deep-frying food - same goes for burns.

DON'T put anything oily (like butter or margarine) on a part of the body that is trying to regulate body temperature; it will attempt to fry itself, albeit at a temperature lower than required to actually cook.

do you mean it turns red? if you do it is because very dry skin turns red when it is moisturised it will settle down