McDermott is looking to sign an established Premier League player to assist the club's battle against relegation, but denied Welbeck is on his wish list.
The 22-year-old is behind Robin van Persie, Wayne Rooney and Javier Hernandez in the Old Trafford pecking order, leading to speculation he would be loaned to another club until the end of the season.
McDermott distanced himself from one of the more unlikely transfer stories of the January window.
"I can't see Sir Alex Ferguson sending Danny out to any club. I don't know where this has come from, it's got nothing to do with me," McDermott said.
"Welbeck's a great player and I'm sure Sir Alex Ferguson thinks he's a great player too. Everyone in the country thinks that."
Reading have already signed midfielders Daniel Carrico and Hope Akpan during the transfer window and McDermott hopes to make one further addition.
"We're still looking for an experienced player and if we can find one who has played some games in the division that would be good for us," he said.
"It's never easy to find a player like that, but it's definitely on the agenda."