Blend together first 3 ingredients, 1 1/2 teaspoons salt, and 2 tablespoons water in 3-quart soup kettle.
Add oysters and butter.
Simmer over very low heat 3 to 4 minutes, stirring gently till edges of oysters curl.
Add hot milk; remove from heat.
Cover; let stand 15 minutes.
Top servings with pats of butter.