Chelsea, bidding for their first title in 50 years, went seven points clear at the top of the Premier League after beating Middlesbrough 2-0, their fifth successive victory without conceding a goal.
Wenger said Arsenal's London rivals, beaten only once this season, clearly had the upper hand with 16 games remaining.
"We will try and keep as close as we can and take advantage if they have a bad period," the French coach told reporters.
"We lost two points tonight but it would be criminal to give up and say they have won the title, in football things change quickly.
"However, at the moment they don't look vulnerable - the only chance we have is for us to come back and we want to give as much as we can in every game. This is a job for strong men."
Arsenal were in danger of losing their first home league match since May 2003 when Shaun Wright-Phillips, stepson of former Arsenal striker Ian Wright, put City ahead with a scorching shot from outside the penalty area after 31
With four young players in the side, captain and midfielder Patrick Vieira off-form and striker Thierry Henry prone to over-elaboration, Arsenal looked disjointed during the first half before finding their rhythm in the second period.
Henry's clever overhead kick set up Swedish midfielder Freddie Ljungberg for a headed equaliser with 15 minutes left. Dutchman Robin van Persie struck the woodwork late on with a free kick and also hit a sliding left foot volley narrowly over the bar for the home side.
"I was disappointed tonight as I expected to win. Ten out of 12 points (over the Christmas/New Year period) is not a disaster but Chelsea got 12," said Wenger.
City manager Kevin Keegan was delighted by his side's gutsy performance in the face of Arsenal's second half revival.
"We stood up to Arsenal and deserved a point," he said. "We didn't come here just to defend and there is no team in the country that can get a head of steam up like them."