Summer signing Rodri was the next City player to go close, with Patricio reacting sharply to prevent the Spaniard's six-yard effort from finding the back of the net.
Sterling took responsibility for the spot kick, only for the winger to fire the ball at least a yard over the crossbar when attempting to find the top left corner.
Wolves improved as the half progressed, although it was City who continued to look the most likely to open the scoring with Sane dragging a left-footed effort wide after being teed up by Sterling.
As Wolves appeared to be suffering the effects of the semi-final three days ago, City maintained their high intensity, without necessarily forcing Patricio into any significant saves.
City were still having the better of open play as the game progressed into the closing stages, although the closest that they came to a winner was from a Silva set piece which was brilliantly kept out by Patricio.
The goalkeepers were always likely to come out on top in the shootout as a result of the amount of inexperienced outfield players who ended the game, and it was Patricio who starred to hand Wolves a boost ahead of the Europa League second qualifying round next week.
WOLVERHAMPTON WANDERERS (3-5-2): Patricio; Bennett, Coady, Boly (Taylor 80'); Traore (Sanderson 63'), Dendoncker (Wan 80'), Neves (Kilman 80'), Moutinho (Cundle 80'), Jonny (Vinagre 63'); Gibbs-White (Ennis 63'), Jota (Perry 63')
MANCHESTER CITY (4-3-3): Bravo; Danilo, Stones (Gundogan 46'), Laporte (Harwood-Bellis 62'), Zinchenko (Angelino 62'); Rodri (Garcia 62'), De Bruyne (Bernardo 46'), Bernabe (Walker 46'); Sane (Nmencha 62'), Poveda-Ocampo (Knight 74'), Sterling (Silva 46')