* Brent hits highest since July 2015
* Turkey threatens to cut supply from Iraq's Kurdish region
* Oil market rebalancing continues, inventories falling (Updates throughout, adds comment, changes dateline from Tokyo)
LONDON, Sept 26 (Reuters) - Brent oil prices hovered near 26-month highs, supported by Turkey's threat to cut crude exports from Iraq's Kurdistan region as well as signs that market rebalancing is accelerating.
Turkish President Tayyip Erdogan threatened on Monday to cut off the pipeline that carries 500,000-600,000 barrels of crude per day from northern Iraq to the Turkish port of Ceyhan, intensifying pressure on the Kurdish autonomous region over its independence referendum.
The loss of this supply, combined with the 1.8 million bpd of supply cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers, has raised concerns of tighter supply.
The Iraqi government said it will not hold talks with the Kurdistan Regional Government about the results of the referendum, which is expected to show a comfortable majority in favour of independence after the results are announced later this week.
"Although there was plenty of price-bullish news making headlines yesterday, undoubtedly the biggest factor was the referendum in the Kurdistan region of Iraq," analysts at Vienna-based JBC Energy said in a note.
Brent crude futures slipped 17 cents to $58.85 a barrel by 0820 GMT, having earlier hit $59.49, the highest since July 2015 and more than 34 percent above the 2017 low.
U.S. crude WTI futures eased 10 cents to $52.12 a barrel, after hitting a five-month high of $52.43 a barrel.
Top oil executives gathered at the S&P Global Platts APPEC conference in Singapore said strong oil demand this year was accelerating market rebalancing and helping inventory drawdowns.
"Global demand growth is way higher than what we have observed in the last couple of years, coming somewhere close to 1.6 to 1.7 million barrels per day and is driven by distillates", said Janet Kong, BP's chief executive officer, supply and trading, Eastern Hemisphere.
OPEC and non-OPEC producers meeting in Vienna last week said the market was well on its way towards rebalancing.
However, other analysts were sceptical about further price gains due to higher oil output from the United States.
The U.S. Energy Information Administration said that production from wells in shale formations will rise for a 10th month in a row in October.
U.S. shale producers' ability to ramp up output as later-dated crude prices strengthen will keep price volatility low, said Jeffrey Currie, Goldman Sachs' head of global commodities research. (Additional reporting by Osamu Tsukimori in Tokyo, editing by Louise Heavens)