"The December market will be affected by Bass Strait," said a trader with a European major.

"You may still have to pay up for early December barrels, but the later December market will be softer," he said.

Esso Australia, operator of the 230,000 barrels-per-day Bass Strait field, said on Monday it would resume production at between 10 and 20 percent of capacity in mid-November and it expected full production to be reached by the end of December.

The field was shut down in late September following an explosion at the Longford processing plant, forcing Australian refiners to get crudes from Malaysia, Indonesia, Vietnam and Papua New Guinea and pushing up spot prices of regional grades.

November Tapis, the benchmark crude for Asian light grades, reached a year high premium of45 cents per barrel to the Asian Petroleum Price Index (APPI).

"In November, Australian refiners had to buy spot cargoes because there were no other alternatives, but Bass Strait will meet the Australian demand in December," said the trader.

But in the Middle East crude market, December is likely to fare better than November, traders said, mainly because November supplies had been fully committed without great difficulty.

"December right now is looking quite firm, because unlike October and November, there isn't an overhang in supplies from the previous months," said a trader with a major oil company.

Traders said another factor fuelling the mildly bullish sentiment were expectations that Middle East producers, especially Oman, would continue to reflect spot market fundamentals and set their retroactive official selling prices (OSPs) at competitive levels.

"I think that what we need is just one more month of Oman OSP moving the way it has in the last few months to push the market up to normal levelsof parity or a small premium," said a trader wit a European major.

For September, Oman's ministry of petroleum and minerals set its retroactive crude OSP at 47 cents below benchmark Dubai, compared to 10 cents below Dubai in August, in an attempt to increase its competitiveness.

That lifted the November Oman spot price to OSP minus 20 cents, compared with OSP minus 40 cents for October loadings.

But the lack of buying from China for November failed to push Oman back into the premium region, traders said.

Some said they expected China to buy some barrels on the spot market in December, although not the big volumes it bought previously.

"I expect that there will be some selective spot liftings by China in December," said a western trader.

"The fact that they were not selling much Oman in November, I think is a signal that they may start to buy a little in December," he said.

Since September, China, normally a big spot buyer of Oman, has halted purchases and instead sold several cargoes a month onthe spot market, pushing Oman prices down.

But traders said firm indications of December bids and offers of Middle East crudes would only emerge once the OSPs were announced next week, which would keep activity this week very limited.