Boss Paul Tait said missed opportunities cost his side dear as Everton Under-18s fell to a narrow 3-2 defeat against Manchester United.
The young Blues caused their opponents problems throughout but failed to take the opportunity to leapfrog city rivals Liverpool ahead of Saturday's Merseyside derby.
Goals from Tyler Onyango and Tom Cannon proved not to be enough as an Anthony Elanga strike and Ayodeji Sotona double gave United victory in an entertaining contest at USM Finch Farm.
"I thought it was a fantastic game," Tait told evertonfc.com.
"It was one of the best games I have seen all season, with both teams going at it.
"There were a lot of individual players with flair and creativity but also two teams who wanted to win the game competing with each other.
"I was delighted with the way we set up from the start and really took the game to them. But the goals we have given away, we could have done better with."
In front of watching Director of Football Marcel Brands, it was the Everton who started the brighter.
Thierry Small caused United problems from the outset, his cross finding Cannon inside the 18-yard area but the striker unable to hook his left-footed effort on target.
The young Blues had ran out 3-2 winners in the reverse fixture back in September and they threatened again when Onyango broke out of midfield and provided an inch-perfect through ball for Cannon, whose driving effort whistled past goalkeeper Ondrej Mastny's post.
Soon after, great play in the centre of the pitch by Sean McAllister won the ball back deep for Everton, and the midfielder then had the awareness to find teammate Lewis Dobbin. After twisting and turning on the edge of the box, the forward got a shot away but saw his effort skim wide of the target.
Dobbin fired over and Seb Quirk drilled a long-range effort into the arms of Mastny as Everton continued to exert pressure.
However, despite the Blues' explosive start, it was the visitors who made the breakthrough. A quick free-kick out to the right caught the Everton defence napping and Lukasz Bejger's fizzing cross was met by Sotona, who nodded home from close range.
As the first half came to a close, Everton continued to carve out the best of the goalscoring opportunities. Excellent defensive work in the middle eventually allowed Cannon to be set away, the forward teeing up a dipping shot for Dobbin that flew agonisingly over the crossbar.
Much like the first half, Everton started the second period strongly and nearly found an equaliser just minutes after the restart, Dobbin picking up where he left off in running at United’s rearguard only to see his fierce strike well saved by Mastny.
Everton finally got their reward when they levelled six minutes into the second half. After escaping down the right once more, Dobbin had the time and space to find Onyango and the midfielder calmly slid the ball home.
The momentum was with Everton and, just moments later, they nearly went ahead. The impressive Dobbin's quick feet opened up some space, but the forward's deflected shot went wide of the post.
Then, the hammer blow.
Just seven minutes after Onyango’s equaliser, Elanga found himself in the right place at the right time to guide the ball past Zan-Luk Leban, before Sotona won and converted a 66th-minute penalty.
Everton were not going down without a fight, however, and in an end-to-end 10-minute spell, the Blues pulled one back.
With Manchester United pressing, the hosts countered through Dobbin and Cannon, the latter producing a calm finish to guide the ball past a helpless Mastny.
Rhys Hughes watched a speculative effort drift over soon after, before excellent play by substitute Liam Higgins found Quirk, only for the midfielder to see his shot swallowed by a sea of red shirts.
"We said at half-time that all we needed was a goal but that we just got a bit ragged with our finishing in the first half,” added Tait.
"Then, in the second half, we got the goal and I thought we had some real momentum. But then we conceded the penalty.
"At the end, we kept playing the correct way, we were getting down the side of them and playing through the lines. We played some good stuff in the pockets and we had some really great chances.
"But, you are playing Manchester United and you have to take your opportunities."
Everton Under-18s will be back in action on Saturday when they make the short trip to Kirkby to take on Merseyside rivals Liverpool in the Under-18 Premier League North (kick off 11am).