The 24-year-old, who was signed by Steve Bruce from Wigan Athletic in 2009, was set to become a free agent this summer, but O’Neill was delighted to secure Cattermole’s future at the club.
“I think he has excellent potential,” O’Neill said.
“I have only got to know him in the last nine or 10 months and during his time on the field he was looking to improve his own game.
“As a consequence of our battles last season he was trying to help everyone around him but maybe he needs to concentrate on his own particular game.
“I think that game can flourish but a lot of it can be up to himself. I think he’s capable of doing more.”
Sunderland face Middlesbrough in the Capital One Cup on Tuesday, and O’Neill is braced for a difficult test after their local rivals forced the Black Cats to a replay in the FA Cup last season – the Premier League side went on to win 2-1 at the Riverside Stadium
“Those games last season were very difficult for us and considering that Middlesbrough might have reflected on their league position last year, they played very well against us on both occasions.
“I feel that they have the capabilities and have a bit of firepower and have a bit of creativity in their side.”
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