1. He is old and frail. He cannot move much, and is incapable of making a thrusting motion
2. It is immoral. Master oogway knows this, for he is very wise. He thinks differently from others, which is why he is so high on the hierarchy. He used his wisdom and patience to train great warriors. His wisdom tells him that having sex at such an old age is immoral, in fact having sex at all is immoral. Even though it may SEEM like you are pleasuring your lady friend, in reality you are giving her the burden of child birth. Master oogway wanted to avoid this. Which is why he also taught master shifu and po of the virgin way. They cannot cum for it would create incentive to have sex. Kung fu panda promotes virginism, which is why it is such a masterpiece.

Tl:dr : morality and hip problems