The Black Cats boss is looking make the Wolves striker his second summer signing and is also considering a move for Blackburn's Junior Hoilett after Asamoah Gyan left the club
Fletcher will be seen as a direct replacement for Asamoah Gyan, who completed his move to UAE side Al-Ain this week.
The Black Cats banked a further £6 million from the Ghanaian's exit, and are looking to use that money in their pursuit of Scot, Fletcher.
Sunderland and Wolves are still some way apart in their valuations of the 25 year old, but with Fletcher eager to move to the North East, it seems that a deal between the two clubs could be imminent.
Fletcher isn't the only name on O'Neill's summer transfer list, with Blackburn winger Junior Hoilett on the manager's radar as well.
The free agent was attracting interest from bitter rivals Newcastle, but Hoilett's wage demands appear to have scuppered a move to the Sports Direct Arena.
And O'Neill is looking to take advantage of the Magpie's financial reservations and add the effervescent Canadian to his ever improving Sunderland squad, which has already seen the arrival of defender Carlos Cuellar this summer.