I think I read that if say you had faulty o2 sensors this might cause an incorrect air fuel ration which in turn could be one reason an engine oil becomes black. Is this correct?
Yes. Rich mixtures will blacken oil faster. Another common cause of faster oil blackening is air filtering problems. Use exact air filter size and be sure it is properly seated before closing the air filter housing. After-market air filter housings are usually not as effective as factory air filter housing. It's a common problem found on sports cars and trucks. Be careful and avoid falling victim to advertised after-market modifications that improve performance. More power means blacker oil and shorter engine life. Engine computers often constrain operations to keep emissions legal making most after-market products unable to change performance noticably.
All oil is going to go black eventually. Black oil is really not indicative of anything bad, the idea that "it's no longer gold, it must be changed" is really just something that lube shops use to sell oil changes. Lots of cars will have black oil 1000 miles after it is changed, it does not necessarily indicate a problem. Please don't start throwing replacement parts at your car based off of "eyeball tests". If you are truly worried your oxygen sensor is bad (in turn causing you to run rich) then get a proper oil test done by a company like Blackstone.
Yes, an incorrect air-fuel ratio can cause engine oil to go black. Specifically, a rich condition pushes smokey, un-burned fuel exhaust past the piston rings that gets absorbed by the engine's crankcase oil.
If your O2 sensors are really faulty, however, you will have a Check Engine light illuminated on the dashboard. Also, O2 sensors often get dirty and cause a temporary rich condition that blackens oil, but they can be cleaned by running the car full throttle and at sustained, lower gear speeds around 3,200 RPM.
My cars blacken oil prematurely due to short, low speed trips that do not permit the engine to reach full temperature. These conditions keep the engine running rich because of the usual warm-up requirements ("choke") of an internal combustion engine, causing a greater amount of un-burned soot to enter the crankcase.
When the oil is visibly black due to soot, it must be changed more frequently. Motor oil can hold a good degree of particulate (as Sherman418 suggests), but there is a definite limit and I have had problems with the soot condensing into sludge that causes sticking valve trains and piston rings. I change my oil after 1,500 miles, using one quart of a kerosene-based "flush" in the crankcase for 15 minutes prior to draining the crankcase so as to dissolve and remove sludge build-up. In this way, I have resolved ticking valves, loss of compression/power and the uneven idle I used to experience.
There are many other causes of a dirty air-fuel ratio that can be alleviated by adding cleaner in the gas tank, which has reduced my blackened oil problems. I regularly use a homemade mixture of 60% automatic transmission fluid (ATF), 40% mineral spirits ("paint thinner" from a hardware store) in the gas tank at a treat rate of 1.5 oz. per gallon. I run the car full throttle, 50-80 MPH on the highway five to ten times in a row and drive locally in low gear for 5-15 minutes. I perform this regimen every fourth tankful of gas, but always add a half ounce of ATF per gallon of gas. It also helps to substitute a half quart of ATF for crankcase oil at every oil change.