The hosts were undone by late goals from Lior Refaelov and Eden Ben Basat in the World Cup qualifier to leave O'Neill still without a victory after nine matches in charge.
"It's hugely disappointing, hugely frustrating," said O'Neill.
"I felt we controlled large portions of the game again, certainly in the first half I thought some of our play was excellent, we created some good chances which we didn't take and we were punished twice on the counter-attack towards the end.
"Again we make life difficult for ourselves to be honest.
"It's just a case of when we've been in a strong position in games, when we've dominated possession, we've never capitalised on that.
"We've missed chances at important parts of the game and ultimately we've been punished when we've given the other team a bit of initiative.
"We have to start winning games, we have to get a winning mentality into this group of players."
Captain Steven Davis added: "I think it's been the story of our group so far. If you don't take your chances at this level you get punished.
"If you analyse the game we had the majority of chances and possession. So we're massively disappointed again tonight, we can't keep letting this happen to us."