But there was much to cheer for boss Davies after a late Ken Owens try was converted by Rhys Priestland to secure what could be a vital bonus point.
"We were very disappointed with the final result - our performance was a level up from last week and there's little doubt it was a game that could have gone either way," said Davies, who sees his side sit five points behind Munster in Pool One.
"I am very proud of the way our players went about their business here and what they stood for in terms of Scarlets rugby, they certainly showed that they had the stomach and will to front up.
"We look to play rugby, and an open, exciting and expansive brand of the game, but coupled with that we have to use our heads and get clearer and more clinical in the contact area.
"A total of 20 points could see you qualify as a best-runner up so we are still in with a chance, which is important at this stage. But we realistic that there is still a lot to do to get to there."
While defending RaboDirect PRO12 champions Munster now sit top of Pool One in Europe Davies has still seen plenty of signs of encouragement from the performances of his youthful side.
And if they can cut out some of the naive mistakes that plagued their performances against the Red Army then Davies is confident they will be a force to be reckoned with.
"We are a team that's still reasonably young, there is huge potential in this side and we showed plenty of intensity in our game," he added.
"We still have a step to make and we must be hard on ourselves and as a group we have to drive this team harder to get success from these types of opponent and fixture.
"We have to deal with the black arts of the contact area and Munster showed they are shrewd in that area.
"We missed out at key moments and a couple of unforced errors put a bit of pressure on us plus there were some big 50/50 calls that went their way.
"Munster are a good side, they have a lot of experience and know how to get on the right side of those moments and grind out wins and have done it constantly now throughout their Heineken Cup campaign."