The Gunners boss concedes that his side's title chances have faded due to injuries and says that they have to be wary of Everton, who are six points behind with a game in hand
Jose Mourinho's side are three points clear of City at the top of the Premier League, although Manuel Pellegrini's men have two games in hand following their 3-0 win over Manchester United at Old Trafford.
Arsenal, meanwhile, lost more ground in the title race after failing to see out a 2-1 lead against Swansea and are now six points adrift of top spot.
"Everton won so we have to focus and prepare well for the next game," Wenger told the club's official website.
|66/1||Arsenal are 66/1 with Bet365 to win the Premier League this season|
"They are favourites as they have two games in hand; them and Chelsea are favourites now for the title.
"We have not too much room to come back into it,but we have to get some players back. It is difficult to fight with half the team out."
Wilfried Bony had given Swansea the lead after 11 minutes at the Emirates Stadium before two swift goals from Lukas Podolski and Olivier Giroud put Arsenal on course to bounce back from Saturday's 6-0 defeat to Chelsea.
But Mathieu Flamini's own goal in the 90th minute kept Wenger's side in fourth spot, with Everton, who beat Newcastle 3-0 on Tuesday, six points behind with a game in hand - and a match between the two still to come.
“We have to look behind us and, of course, try to look in front of us," said Wenger. "The result is very disappointing but the spirit we put in and the effort we put in was great and we have to take it on the chin.
"We made the most difficult [part] by coming back to 2-1 and after that you could see that maybe we were too focused to keep the result and maybe too conservative because of confidence level had been affected certainly by Saturday.
"We just wanted to win the game without pushing anymore forward and a mistake happened, unfortunately, and it created a result we didn't want but overall I have to give credit to the fighting spirit and the desire we put into that game."