Red Cross medics measure the temperature of participants of the 178th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria, on March 5, 2020. Alex Halada | Getty Images

Brent crude futures could plunge to "single-digit lows" if major oil producers fail to reach a deal to cut output at a time when demand has collapsed due to the coronavirus pandemic, Fitch Solutions said in a Friday report. The Organization of the Petroleum Exporting Countries and its allies are expected to meet on Thursday — a delay from Monday — in an attempt to agree on production cuts. A previous deal by the group — commonly known as OPEC+ — expired in March after Saudi Arabia and Russia failed to reach an agreement. The fallout sent oil prices plummeting to multi-year lows. The expiry of the deal means that producers are free to increase output this month, with Saudi Arabia, United Arab Emirates and Russia among those saying that they would do so.

Analysts from Fitch Solutions said a fall in demand and an increase in supply could result in more than 20 million barrel per day of excess oil. That would put the oil market under "extreme physical pressure," they wrote in the report published before the OPEC+ meeting was postponed. "While it is unlikely that nominal storage capacity will be breached, it is possible that the sheer scale of the oversupply will overwhelm global logistics chains, plunging Brent into single-digit lows," the analysts added. Oil futures have fallen by roughly 50% since the start of the year. On Monday, however, oil prices trimmed earlier losses after Kirill Dmitriev, the chief executive of Russia's sovereign wealth fund, told CNBC on Monday that Moscow and Riyadh were "very close" to a deal. Brent crude fell by around 1.7% to $33.53 a barrel, while the U.S. West Taxes Intermediate crude dipped by 2% to around $27.72 a barrel. "I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close," said Dmitriev, CEO of the Russian Direct Investment Fund.

Oil prices to stay low