The Black Cats manager saw Gabriel Agbonlahor consign his side to defeat as, once more, they struggled to find goals in their match against Aston Villa at the Stadium of Light
The Black Cats lost at home for the second time in a week as Gabriel Agbonlahor's strike gave Aston Villa their first away win since January.
However, despite being without a win since September having just hit the target once in that time, O'Neill feels the Wearsiders' fortunes will turn if they keep perservering.
"I thought we've thrown just about everything at them to try and get on the score-sheet, that eluded us again but that will turn," he told reporters.
"I didn't think we deserved to lose the game. Villa scored when we were probably having our best spell at that time and that's the way it's falling.
"Nothing fell to us in the penalty area but unlike Tuesday I thought there was a really big determination to try and turn this around. We're very disappointed but we're not beaten.
"We have to score some goals, I think when we get the elusive goal things will fall into place but it's not as simple as that. But we have the capabilities and the number of one-on-one's today were numerous and we had enough pressure on to break them down but we weren't able to do that today.
"I know the players better now essentially, bar a couple of changes, the team I met up with in the December of last year. So I've got to know them for a year, they're very disappointed obviously but we have the character in the side to come through."
The 60-year-old believes his side were denied a penalty when Adam Johnson's shot appeared to hit Christian Benteke on the arm, comparing it to the penalty awarded to Manchester United against Arsenal earlier on Saturday.
"The players around the incident said it was a penalty but the referee's chosen not to give it," he explained. "That's his prerogative.
"Interestingly we did have a meeting at the beginning of the season when the referees came to speak to us to tell us if you have your arms in the air and even, as we saw earlier today, to avoid something hitting your face, then there's the likelihood that will be given as a penalty."
O'Neill admits he and his team are facing a tough time of it at the moment but believes his experience and his faith in the team will see the Black Cats through.
"Management is trying most of the time," he reflected. "When I went to Leicester City first of all it was really difficult and the crowd became very anxious and very impatient at that stage, but we were able to turn it around and had a really good time for a number of years.
"Aston Villa's first year it was always going to be difficult, I thought we didn't have the squad to cope with it. This is a trying time of course but we'll come through it.
"I have faith in the team and the players that I think, within the confines of the dressing room, think that they're good players. We're lacking a bit of confidence but we'll come good."