Oil futures snapped a two-day losing streak Wednesday, helped by a small but surprising decline in U.S. crude inventories and a report that OPEC+ may consider another delay in its planned oil production increase.

The U.S. Energy Information Administration reported an unexpected 515K-barrel draw in domestic crude stocks to 425M barrels in the week ended October 25, coming in ~4% below the five-year average for the time of year.

Gasoline inventories fell by 2.7M barrels to 211M barrels, 3% below the five-year average, and distillate fuel stocks fell by 977K barrels to 113M barrels, or 9% below the five-year average, the EIA said.

Demand for gasoline rose, with total motor gasoline supplied - a proxy for demand - at 9.16M bbl/day in the latest week, from 8.84M bbl/day a week earlier.

Also, Reuters reported OPEC+ could delay the start of returning barrels to the market planned for December by a month or more because of concerns over soft oil demand and rising supply.

OPEC+ has cut production by 5.86M bbl/day, equivalent to ~5.7% of global oil demand, and it is scheduled to raise output by 180K bbl/day in December; a decision to postpone the increase could come as early as next week, Reuters said.

Front-month Nymex crude (CL1:COM) for December delivery settled +2.1% to $68.61/bbl, after closing the previous session at seven-month lows, and front-month December Brent (CO1:COM) ended +2% to $72.55/bbl.

U.S. natural gas futures fell ahead of weekly storage numbers that are expected to show the surplus rising for a second straight week; the Nymex December front-month contract (NG1:COM) finished -0.5% at $2.845/MMBtu.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

The oil market has "relaxed too quickly" over perceived lower risk in the Middle East, and renewed hostilities between Israel and Iran after the U.S. presidential election could boost prices, Standard Chartered said.

"There has been a trend over the past year for the market to act as if every escalation in Middle East geopolitical risk is a de-escalation," Standard Chartered analysts wrote, noting Israel does not appear to have completed all of its objectives in Iran, and the scope for further action is "likely to widen significantly as soon as voting has concluded in the U.S. election."

The two-month period leading up to the presidential inauguration on January 20 represents a potential "window for an intensification," the analysts said.