The Chilean believes the Red Devils will keep fighting to the end and has also suggested Liverpool and Everton will be in the mix at the end of the season.
The Red Devils are currently in seventh place, 11 points behind leaders Arsenal and 10 behind their cross-town rivals.
However, Pellegrini concedes that while he is keeping more of an eye on high-flying Arsenal and Chelsea, it would be foolish to rule out a late charge from David Moyes' men.
"Of course, the major rivals at this moment are the teams that are very near our team," he told reporters. "Arsenal, who are on top, one point ahead of us, and Chelsea, who are one point behind. But I'm absolutely sure that Manchester United will continue fighting until the end because they are used to it.
"Also, I think that Liverpool and Everton will continue fighting until the end - they've both played very well. At the moment, all of those teams can fight for the title."
City has netted 57 goals in 20 Premier League games so far this season, 10 more than the current bottom three teams combined, but Pellegrini is wary of talking about his side's title chances.
"We are in a very good moment, but we are just in the middle of the season," he said. "It is very important now to finish the season [well].
"It will be a very close fight to the end of the year with four or five clubs."
The Chilean also took the time to praise Yaya Toure, who was named African Footballer of the Year for the third consecutive time on Thursday.
"It's not easy to win it three times in a continent that has so many players playing everywhere," Pellegrini said. "I think it's very important for him, very important for the team and very important for the club. We are very happy for him."
Pellegrini was named Barclays Premier League Manager of the Month for December earlier on Friday.