We cannot delete reports using the Report Server UI. After you select the report and choose to delete it, the report appears as removed from the list, even though the details are still visible. If you refresh the page, the report is still there.
Further investigation revealed that the ServiceAgent is not running. There is no proper error message indicating this though.
The issue is reproducible only with the Report Server running under HTTPS. When under HTTP there is a proper message stating that the ServiceAgent is stopped.