In the movie, the Germans called it Bold. It was also called Pilenwerfer
http://en.wikipedia.org/wiki/Pillenwerfer
I think the reason it was coloured like oil in the movie was so that it could be easily seen by the audience. The Bold would "fiz" and make bubbles which would probably be difficult to reproduce on the screen and would be difficult for the audience to appreciate.
Here is another reference link
http://www.uboataces.com/sonar-decoys.shtml