* U.S. crude stocks fell by 761,000 barrels last week -API
* Texas oil output flat in July -regulator (Updates prices)
By Fergus Jensen
JAKARTA, Sept 27 (Reuters) - Oil prices rose on Wednesday, with the Brent benchmark hovering near a 26-month high hit in the previous session, after U.S. oil inventories unexpectedly declined as refiners raised output and amid threats from Turkey to cut crude exports from Iraq.
Brent crude for November delivery was up 29 cents, or 0.5 percent, at $58.73 a barrel, as of 0603 GMT. It settled down 1 percent on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34 percent above its 2017 low.
U.S. crude for November delivery rose 34 cents, or 0.7 percent, to $52.22 a barrel, having settled down 0.7 percent in the previous session after hitting a five-month high of $52.43.
Oil prices have been supported by output curbs of 1.8 million barrels per day by the Organization of Petroleum Exporting Countries (OPEC), and cuts by other major producers, although U.S. crude has lagged behind Brent amid concerns that U.S. production growth could stoke oversupply.
U.S. crude stocks fell by 761,000 barrels last week as refineries boosted production, while gasoline inventories increased and distillate stocks fell, data from industry group American Petroleum Institute showed on Tuesday, in contrast with market expectations.
Refinery crude runs rose by 1.3 million barrels per day, API data showed.
U.S. crude inventories were seen rising for a fourth straight week, an extended Reuters poll showed on Tuesday.
"There's pretty strong upward momentum at the moment," said Ric Spooner, chief market analyst at CMC Markets in Sydney, referring to a better-than-expected near-term supply balance outlook.
Crude oil production in Texas, one of the biggest producers of shale oil in the United States, in July fell less than 1 percent compared with a year ago, the state's energy regulator said on Tuesday.
Any sign of faltering U.S. output could be seen as positive for prices amid growing global oil demand.
"Going forward, oil is likely to remain supported as supply disruptions, combined with solid global demand, will probably continue to lift prices," ANZ said in a research note.
Monroe Energy, a subsidiary of Delta Air Lines, ran out of crude oil at its 185,000 barrels-per-day Trainer, Pennsylvania, refinery amid shipping delays due to rough seas caused by Hurricanes Jose and Maria, according to a source familiar with the company's operations and Reuters shipping data.
The U.S. Energy Information Administration (EIA) will release official government inventory data at 10:30 a.m. EDT (1430 GMT).
Turkish President Tayyip Erdogan on Tuesday repeated a threat to cut off the pipeline that carries 500,000-600,000 barrels per day (bpd) of crude from northern Iraq to the Turkish port of Ceyhan in retaliation for an independence referendum in Iraqi Kurdistan.
Writing by Fergus Jensen; Editing by Sherry Jacob-Phillips and Christian Schmollinger