Does melting HDPE plastic produce toxic fumes? (melting, not burning)
This table indicates that polyethylene (HD/LD not specified) "melts at" 135°C, decomposes in the range 335-450°C, and produces vapors that will ignite between 341-357°C.

I'm sure melting/softening temperature is more complex than that, but I'm not sure that you should expect much decomposition into toxic gases at temperatures below 260°C.

However, if you're melting it in an oven, it's possible to overshoot the setpoint temperature. Your oven's thermostat might be slow to kick on and off. Direct thermal radiation from the heating element can heat an object in the oven well beyond the air temperature. Your plastic can even spill/drip onto the heating element.

I wouldn't like the idea of disposing of canola oil contaminated with unknown HDPE breakdown products. I'd be happier using some sort of double-boiler arrangement, where the HDPE is in a container that's heated by a bath of some other fluid. I'd suggest paraffin as a heat-transfer fluid, but its flash point is a bit low (200-240°C?)