Hydrogen is typically produced from arcing or corona internal to the transformer breaking down the hydrocarbons. You need to look at the other gasses presnet to determine the cause.
As I remember every type of malfunction in transformator leads to a different gases in transformator oil. I will try to find my notes where I have the table, but it is certainly some sort of malfunction. Try to find out from oil supplier that table it will give you a pretty good idea with what are you dealing with.
Transformer oil consists of long chain molecules of hydrogen and carbon, hence the name "Hydrocarbon". The long chains make a material that is liquid at normal temperatures and pressures. These molecules are stable.
However, if something happens inside your transformer to elevate the pressure and temperature, the long chains are broken into shorter bits. some of these fragments of the formerly long chains are gases like ethane, methane, ethylene and hydrogen.
These gases typically dissolve in the oil and some of them migrate out of the oil into the gas space of your transformer where they can be detected and analyzed.
Each gas is associated with a particular power level needed to crack the long chain of the oil into the smaller gas molecule. Many scholarly papers are available concerning this phenomenon.
A phone call to Doble Engineering in Massachusetts will get you more information about gases in insulating oil than you ever thought possible.
