How can I lose fat in my upper hips and make them narrower?

In order to lose weight in your upper hips, you'll have to utilize a combination of healthy diet, caloric restriction, high intensity interval training, and hip-dominant exercises.

In order to improve your diet, you may have to eliminate some things while adding others:

Eliminate processed and fried foods (this includes refined carbohydrates)
Reduce your sugar intake
Increase your daily intake of vegetables and fruits
Introduce yourself to dairy that is loaded with probiotics (Greek yogurt and Keifer are great choices)

How you eat is also very important:

For each meal, you should be eating a well balanced ratio of complex carbohydrates, clean protein, and healthy fats
Start every day with breakfast
After breakfast, continue eating smalls meals every 2-3 hours
Drink 8 glasses of water per day
Keep a food log to track how well you do each day

Now for your exercise program: In conjunction with a strength training program, you need to be incorporating a high intensity cardiovascular workout. This is where HIIT comes in:

8-10 compound bodyweight-based exercises
Perform them in rapid succession
Once the last exercise is complete, take a 60 to 90 second break and begin again
2 to 3 sets for beginners and
4 to 6 sets for advanced lifters
Perform a HIIT program 2 to 3 times a week along with your normal strength training

Lastly, hip-dominant exercises will help to burn the extra weight off of your hips.