The Reds, fresh from the euphoria of beating rivals Derby County and unveiling redevelopment plans for the City Ground, were beaten 2-0 at Stoke City.
Peter Etebo put the hosts ahead on 15 minutes with the Forest defence backing off and Benik Afobe made sure of the points on 74 minutes with a fine solo strike.
O’Neill was disappointed with his side’s display at the Bet365 Stadium on an afternoon which could have seen them close the gap to the Championship play-offs.
“No question that it was a disappointing afternoon for us,” he said. “We were terrific against Derby on Monday night but today we conceded a poor early goal from our point of view and unfortunately we were never able to retrieve it.
“You always expect the home side to be on the front foot from the start but the goal obviously gave them a big lift. I didn’t think there was a lot between the two teams this afternoon but we didn’t do enough to take anything from the game.
“I said during the week that any negative result knocks you back a bit and you have to follow it up with a victory. We’ve got a very important home game against Hull City next weekend and it is vital that we respond.”
O’Neill’s assistant, Roy Keane, was shown a yellow card by referee Roger East on Saturday, but the manager was not sure as to why.
“I genuinely don’t know why Roy (Keane) was shown a yellow card and I’ve not had time to ask the referee yet. Yellow cards used to be given out on the pitch but now it seems like they are shown everywhere,” he added.