Newcastle is keen on bringing in Harewood on a three-month loan deal and O’Neill believes Harewood would benefit from more regular first-team football.
“Newcastle are still looking to do something in terms of Marlon,” said O’Neill.
“I think they are waiting to hear whether they have permission from their owner to go and progress the move.
“I think the opportunity for him now coming back from injury, to get involved in a cause, would be very important and only a benefit for all of us.
“Marlon has been out since pre-season with injuries. He is fighting back, is feeling fine, trained for a few days on the trot.
“But people are pressing for places and at this moment we have competition up front. Delfouneso is going to be a really excellent player and he is hovering around in terms of being on the bench.”